Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2021 | Jul. 12, 2021 | Sep. 30, 2020 | |
Cover [Abstract] | |||
Entity Registrant Name | Sonoma Pharmaceuticals, Inc. | ||
Entity Central Index Key | 0001367083 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2021 | ||
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 | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2021 | ||
Entity public float | $ 16,928,953 | ||
Entity Common Stock, Shares Outstanding | 2,091,242 | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Interactive Data Current | Yes | ||
Incorporation State | DE | ||
Entity File Number | 001-33216 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Mar. 31, 2020 |
Current assets: | ||
Cash and cash equivalents | $ 4,220 | $ 3,691 |
Accounts receivable, net | 2,806 | 3,973 |
Inventories | 2,530 | 2,181 |
Prepaid expenses and other current assets | 3,218 | 2,256 |
Current portion of deferred consideration, net of discount | 209 | 182 |
Total current assets | 12,983 | 12,283 |
Property and equipment, net | 360 | 365 |
Operating lease, right of use assets | 769 | 359 |
Deferred consideration, net of discount, less current portion | 763 | 786 |
Non-current assets held for sale | 0 | 704 |
Other assets | 112 | 64 |
Total assets | 14,987 | 14,561 |
Current liabilities: | ||
Accounts payable | 1,769 | 2,067 |
Accrued expenses and other current liabilities | 1,154 | 1,774 |
Deferred revenue | 267 | 228 |
Deferred revenue Invekra (Note 4) | 52 | 45 |
Current portion of long-term debt | 596 | 481 |
Operating lease liabilities | 240 | 134 |
Total current liabilities | 4,078 | 4,729 |
Long-term deferred revenue Invekra | 229 | 245 |
Long-term debt, less current portion - PPP | 1,310 | 0 |
Withholding Tax Payable | 3,478 | 3,082 |
Liabilities associated with assets currently held for sale | 0 | 646 |
Operating lease liabilities, less current portion | 529 | 235 |
Total liabilities | 9,624 | 8,937 |
Commitments and Contingencies (Note 13) | ||
Stockholders' Equity | ||
Convertible preferred stock, $0.0001 par value; 714,286 shares authorized at March 31, 2021 and March 31, 2020, respectively, 0 and 1.55 shares issued and outstanding at March 31, 2021 and March 31, 2020, respectively | 0 | 0 |
Common stock, $0.0001 par value; 24,000,000 shares authorized at March 31, 2021 and March 31, 2020, respectively, 2,092,909 and 1,777,483 shares issued and outstanding at March 31, 2021 and March 31, 2020, respectively (Note 14) | 2 | 2 |
Additional paid-in capital | 189,217 | 186,559 |
Accumulated deficit | (179,277) | (175,327) |
Accumulated other comprehensive loss | (4,579) | (5,610) |
Total stockholders' equity | 5,363 | 5,624 |
Total liabilities and stockholders' equity | $ 14,987 | $ 14,561 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2021 | Mar. 31, 2020 |
Common stock par value | $ 0.0001 | $ 0.0001 |
Common stock shares authorized | 24,000,000 | 24,000,000 |
Common stock shares issued | 2,092,909 | 1,777,483 |
Common stock shares outstanding | 2,092,909 | 1,777,483 |
Convertible Preferred Stock [Member] | ||
Convertible preferred stock par value | $ 0.0001 | $ 0.0001 |
Convertible preferred stock shares authorized | 714,286 | 714,286 |
Convertible preferred stock shares issued | 0 | 2 |
Convertible preferred stock shares outstanding | 0 | 2 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive (Loss) Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | $ 18,629 | $ 17,928 |
Total cost of revenues | 12,070 | 9,806 |
Gross profit | 6,559 | 8,122 |
Operating expenses | ||
Research and development | 555 | 1,339 |
Selling, general and administrative | 9,453 | 14,173 |
Total operating expenses | 10,008 | 15,512 |
Loss from operations | (3,449) | (7,390) |
Interest expense | (12) | (16) |
Interest income | 16 | 50 |
Gain on sale of assets | 137 | 3,572 |
Other income (expense) | (594) | 240 |
Loss before income taxes | (3,902) | (3,544) |
Income tax (expense) | (713) | (29) |
Loss from continuing operations | (4,615) | (3,573) |
Income from discontinued operations, net of tax | 665 | 265 |
Net loss | $ (3,950) | $ (3,308) |
Net loss per share: basic and diluted from continuing operations | $ (2.31) | $ (2.42) |
Income per share from discontinued operations | 0.33 | 0.18 |
Net loss per share: basic and diluted | $ (1.97) | $ (2.24) |
Weighted-average number of shares used in common per share calculations: basic and diluted | 1,996 | 1,477 |
Other comprehensive loss | ||
Net loss | $ (3,950) | $ (3,308) |
Foreign currency translation adjustments | 1,031 | (1,261) |
Comprehensive loss | (2,919) | (4,569) |
Product [Member] | ||
Revenues | 18,517 | 17,777 |
Service [Member] | ||
Revenues | $ 112 | $ 151 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Series C Preferred Stock | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Income / Loss [Member] | Total |
Beginning balance, shares at Mar. 31, 2019 | 2 | 1,316,335 | ||||
Beginning balance, amount at Mar. 31, 2019 | $ 0 | $ 2 | $ 184,074 | $ (171,957) | $ (4,349) | $ 7,770 |
Cumulative adjustment to April 1, 2017 resulting from adoption of ASU No. 2016-09 | (62) | (62) | ||||
Issuance of common stock, net of offering costs, shares | 446,577 | |||||
Issuance of common stock, net of offering costs, value | 1,376 | 1,376 | ||||
Reclassification of stock liability to equity, shares | 12,556 | |||||
Reclassification of stock liability to equity, value | 270 | 270 | ||||
Stock based compensation related to issuance of common stock restricted stock grants, shares | 2,015 | |||||
Stock based compensation related to issuance of common stock restricted stock grants, value | 38 | 38 | ||||
Stock-based compensation expense, net of forfeitures | 801 | 801 | ||||
Foreign currency translation adjustment | (1,261) | (1,261) | ||||
Net loss | (3,308) | (3,308) | ||||
Ending balance, shares at Mar. 31, 2020 | 2 | 1,777,483 | ||||
Ending balance, amount at Mar. 31, 2020 | $ 2 | 186,559 | (175,327) | (5,610) | 5,624 | |
Adoption of ASC 842 | ||||||
Shares issued in connection with exercise of stock options, shares | 93,301 | |||||
Shares issued in connection with exercise of stock options, amount | 511 | 511 | ||||
Shares issued in connection with vesting of restricted stock, shares | 3,919 | |||||
Shares issued in connection with vesting of restricted stock, amount | ||||||
Shares issued in connection with exercise of common stock warrants, shares | 200,984 | |||||
Shares issued in connection with exercise of common stock warrants, amount | 1,776 | 1,776 | ||||
Shares issued with conversion of C shares, shares | 2 | 17,222 | ||||
Shares issued with conversion of C shares, amount | ||||||
Employee stock-based compensation expense | 332 | 332 | ||||
Stock based compensation related to issuance of common stock restricted stock grants, value | 39 | 39 | ||||
Foreign currency translation adjustment | 1,031 | 1,031 | ||||
Net loss | (3,950) | (3,950) | ||||
Ending balance, shares at Mar. 31, 2021 | 2,092,909 | |||||
Ending balance, amount at Mar. 31, 2021 | $ 2 | $ 189,217 | $ (179,277) | $ (4,579) | $ 5,363 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net loss | $ (3,950) | $ (3,308) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 227 | 312 |
Provision for (recovery of) doubtful accounts | (903) | 1,004 |
Provision for discounts, rebates, distributor fees and returns | 259 | 787 |
Provision for obsolete inventory | 0 | 526 |
Stock-based compensation | 371 | 839 |
Operating lease right-of-use asset | 0 | 464 |
Loss on disposal of equipment | 0 | 18 |
Gain on sale of assets | (770) | (3,572) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,608 | (2,190) |
Inventories | (65) | 323 |
Deferred consideration, net of discount | 143 | (217) |
Prepaid expenses and other current assets | (5) | (19) |
Accounts payable | (796) | 336 |
Accrued expenses and other current liabilities | (668) | 330 |
Withholding tax payable | 397 | 362 |
Operating lease liabilities | (215) | (489) |
Deferred revenue | (15) | (97) |
Net cash used in operating activities | (3,378) | (4,591) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (179) | (206) |
Deposits | (43) | 50 |
Proceeds from Invekra | 0 | 2,700 |
Proceeds from Micromed Transaction | 610 | 1,100 |
Net cash provided by investing activities | 388 | 3,644 |
Cash flows from financing activities: | ||
Proceeds from sale of common stock net of offering costs | 0 | 1,376 |
Proceeds from PPP Loan | 1,310 | 0 |
Proceeds from exercise of common stock options and warrants | 2,287 | 0 |
Principal payments on long-term debt | (481) | (334) |
Benefit from lease assumed less principal payments on ROU assets | 192 | (13) |
Net cash provided by financing activities | 3,308 | 1,029 |
Effect of exchange rate on cash and cash equivalents | 211 | (80) |
Net increase in cash and cash equivalents | 529 | 2 |
Cash and cash equivalents, beginning of year | 3,691 | 3,689 |
Cash and cash equivalents, end of year | 4,220 | 3,691 |
Supplemental disclosure of cash flow information: | ||
Cash paid for interest | 12 | 16 |
Cash paid for taxes | 941 | 0 |
Non-cash operating and financing activities: | ||
Insurance premiums financed | $ 596 | $ 481 |
1. Organization and Recent Deve
1. Organization and Recent Developments | 12 Months Ended |
Mar. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Recent Developments | NOTE 1 – Organization and Recent Developments Organization Sonoma Pharmaceuticals, 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 was moved to Woodstock, Georgia from Petaluma, California in June 2020. The Company is a global healthcare leader for developing and producing stabilized hypochlorous acid (“HOCl”) products for a wide range of applications, including wound care, animal health care, eye care, oral care and dermatological conditions. The Company’s products reduce infections, itch, pain, scarring and harmful inflammatory responses in a safe and effective manner. In-vitro and clinical studies of HOCl show it to have impressive antipruritic, antimicrobial, antiviral and anti-inflammatory properties. The Company’s stabilized HOCl immediately relieves itch and pain, kills pathogens and breaks down biofilm, does not sting or irritate skin and oxygenates the cells in the area treated assisting the body in its natural healing process. The Company sell its products either directly or via partners in 54 countries worldwide. |
2. Liquidity and Financial Cond
2. Liquidity and Financial Condition | 12 Months Ended |
Mar. 31, 2021 | |
Liquidity And Financial Condition | |
Liquidity and Financial Condition | NOTE 2 – Liquidity and Financial Condition The Company reported a net loss of $3,950,000 for the year ended March 31, 2021. At March 31, 2021 and March 31, 2020, the Company’s accumulated deficit amounted to $179,277,000 and $175,327,000, respectively. The Company had working capital of $8,905,000 and $7,554,000 as of March 31, 2021 and March 31, 2020, respectively. 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 Company’s ability to raise additional capital could be negatively impacted. If the Company is unable to secure additional capital, it may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays in the Company’s continued efforts to commercialize its products, which is critical to the realization of its business plan and the future operations of the Company. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments that may be necessary should the Company be unable to continue as a going concern. COVID – 19 On March 11, 2020 the World Health Organization declared the novel strain of coronavirus (COVID-19) a global pandemic and recommended containment and mitigation measures worldwide. In an effort to mitigate the continued spread of the virus, federal, state and local governments, as well as certain private entities have mandated various restrictions, including travel restrictions, restrictions on public gatherings and quarantining of people who may have been exposed to the virus. As a result of these restrictions, together with a general fear of the impact on the global economy and financial markets, there is significant uncertainty surrounding the potential impact on the Company. As events are rapidly changing, the Company is unable to accurately predict the impact that the coronavirus will have on its business due to uncertainties including, but not limited to, the duration of quarantines and other travel restrictions within China, the U.S. and other affected countries, the ultimate geographical spread of the virus, the severity of the disease, the duration of the outbreak and the public’s response to the outbreak. |
3. Summary of Significant Accou
3. Summary of Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 – Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Aquamed Technologies, Inc. (“Aquamed”), Oculus Technologies of Mexico S.A. de C.V. (“OTM”), and Sonoma Pharmaceuticals Netherlands, B.V. (“SP Europe”). Aquamed has no current operations. All significant intercompany accounts and transactions have been eliminated in consolidation. The functional currency for the Company's wholly-owned subsidiaries incorporated outside the United States (“U.S.”) is the U.S. dollar. All intercompany transactions and balances have been eliminated in consolidation. Basis of presentation The accompanying consolidated financial statements have been prepared by us pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") and are in conformity with U.S. generally accepted accounting principles ("GAAP"). Our fiscal year end is March 31. Unless otherwise stated, all years and dates refer to our fiscal year. Correction of an Immaterial Misstatement in a Prior Period Financial Statement During the year ended March 31, 2021, the Company discovered that it had failed to accrue withholding taxes that would become due to Mexico upon the payment of interest and royalties from the Mexico subsidiary OTM to the United States parent. Due to the large net operating losses in the United States, there would be no benefit available for a subsequent foreign tax credit on the United States tax return, resulting in a net tax expense. The error understated by an immaterial amount the SG&A expenses for each year from the year ended March 31, 2004 to March 31, 2020 as well as understated net loss. The net impact to the opening balance of retained earnings for the year ended March 31, 2020 would be $2,720,000 and the effect to the profit and loss statement would have been $362,000 for the year ended March 31, 2020. Based on an analysis of Accounting Standards Codification (“ASC”) 250 – “Accounting Changes and Error Corrections” (“ASC 250”), Staff Accounting Bulletin 99 – “Materiality” (“SAB 99”) and Staff Accounting Bulletin 108 – “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), the Company determined that these errors were immaterial to the previously issued financial statements, and as such no restatement was necessary. Correcting prior period financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files the prior period financial statements. Accordingly, the misstatements were corrected during the period ended March 31, 2021 in the accompanying balance sheet as of March 31, 2020 and statements of operations for the twelve months ended March 31, 2020. The effects of the revision to the balance sheet as of March 31, 2020 are as follows (in thousands): As Previously Reported Adjustment As Revised SG&A expense – 362 362 Net loss (2,946 ) 362 (3,308 ) Withholding tax payable – (3,082 ) 3,082 Retained earnings (172,244 ) 3,082 (175,326 ) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less when purchased. Our cash equivalents are held in prime money market investments with strong sponsor organizations which are monitored on a continuous basis. 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, fair value allocation of assets sold to Invekra, and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, the Company evaluates and adjusts estimates accordingly. Revenue Recognition On April 1, 2018, the Company adopted Accounting Standards Update ("ASU"), "Revenue from Contracts with Customers Topic 606” (“Topic 606”) using the modified retrospective method. There was no material impact to the Company upon the adoption of Topic 606. Revenue is recognized when the Company transfers promised goods or services to the customer, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company derives the majority of its revenue through sales of its products directly to end users and to distributors. The Company also sells products to a customer base, including hospitals, medical centers, doctors, pharmacies, distributors and wholesalers. The Company also has 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 considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. For all of its sales to non-consignment distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e. when its performance obligation is satisfied), which typically occurs when 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. For product sales to its value-added resellers, non-stocking distributors and end-user customers, the Company grants return privileges to its customers, and because the Company has a long history with its customers, the Company is able to estimate the amount of product that will be returned. Sales incentives and other programs that the Company may make available to these customers are considered to be a form of variable consideration, and the Company maintains estimated accruals and allowances using the expected value method. The Company has entered into consignment arrangements, in which goods are left in the possession of another party to sell. As products are sold from the customer to third parties, the Company recognizes revenue based on a variable percentage of a fixed price. Revenue recognized varies depending on whether a patient is covered by insurance or is not covered by insurance. In addition, the Company may incur a revenue deduction related to the use of the Company’s rebate program. Sales to stocking distributors are made under terms with fixed pricing and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory. Revenue from sales to distributors is recognized upon the transfer of control to the distributor. The Company assessed the promised goods and services in the technical support to Invekra for a ten-year period as being a distinct service that Invekra can benefit from on its own and is separately identifiable from any other promises within the contract. Given that the distinct service is not substantially the same as other goods and services within the Invekra contract, the Company accounted for the distinct service as a performance obligation. Service revenue from testing contracts is recognized as tests are completed and a final report is sent to the customer. Disaggregation of Revenue The following table presents the Company’s disaggregated revenues by revenue source: Year Ended March 31, 2021 2020 Product Human Care $ 15,317,000 $ 15,686,000 Animal Care 3,200,000 2,091,000 18,517,000 17,777,000 Service 112,000 151,000 Total $ 18,629,000 $ 17,928,000 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, 2021 and 2020, no customers represented more than 10% of net accounts receivable balance, respectively. For the year ended March 31, 2021, one customer represented 32%, and one customer represented 15% of net revenues. For the year ended March 31, 2020, one customer represented 15%, and one customer represented 11% 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, 2021 and 2020 in the amounts of $125,000 and $1,028,000, respectively. Additionally, at March 31, 2021 and 2020, the Company has allowances of $1,488,000 and $1,230,000, 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 net realizable value. 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 a provision to reduce the carrying amounts of inventories to their net realizable value in the amounts of $223,000 and $600,000 at March 31, 2021 and 2020, respectively, which is included in cost of product revenues on the Company’s accompanying consolidated statements of comprehensive (loss) income. Financial Assets and Liabilities Financial instruments, including cash and cash equivalents, accounts receivable and accounts payable 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) 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. As of March 31, 2021 and 2020, 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. During the years ended March 31, 2021 and 2020, the Company had noted no indicators of impairment. Research and Development Research and development expenses are charged to operations as incurred and consists primarily of personnel expenses, clinical and regulatory services and supplies. For the years ended March 31, 2021 and 2020, research and development expense amounted to $555,000 and $1,339,000, respectively. Advertising Costs Advertising costs are charged to operations as incurred. Advertising costs amounted to $41,000 and $35,000, for the years ended March 31, 2021 and 2020, respectively. Advertising costs are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income. Shipping and Handling Costs The Company classifies amounts billed to customers related to shipping and handling in sale transactions as product revenues. The corresponding shipping and handling costs incurred are recorded in cost of product revenues. For the years ended March 31, 2021 and 2020, the Company recorded revenue related to shipping and handling costs of $37,000 and $57,000, respectively. These amounts are included in product revenues in the accompanying consolidated statements of comprehensive (loss) income. Foreign Currency Reporting The Company’s subsidiary, OTM, uses the local currency (Mexican Pesos) as its functional currency and its subsidiary, SP 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 $1,031,000 and $(1,261,000) for the years ended March 31, 2021 and 2020, respectively. These amounts were recorded in other comprehensive loss in the accompanying consolidated statements of comprehensive loss for the years ended March 31, 2021 and 2020. Foreign currency transaction gains (losses) relate primarily to trade payables and receivables and intercompany transactions between subsidiaries OTM and SP Europe. These transactions are expected to be settled in the foreseeable future. The Company recorded foreign currency transaction losses of $690,000 for the year ended March 31, 2021, and foreign currency transaction gains of $306,000, for the year ended March 31, 2020. The related amounts were recorded in other expense in the accompanying consolidated statements of comprehensive (loss) income. Stock-Based Compensation The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock 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) income 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, 2021 and 2020 were $4,579,000, and $5,610,000, 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. For the Year Ended March 31, (In thousands, except per share data) 2021 2020 Numerator: Loss from continuing operations $ (4,615 ) $ (3,573 ) Income from discontinued operations 665 265 Net loss $ (3,950 ) $ (3,308 ) Denominator: Weighted-average number of common shares outstanding: basic and diluted 1,996 1,477 Loss per share from continuing operations $ (2.31 ) $ (2.42 ) Income per share from discontinued operations 0.33 0.18 Net loss per share: basic and diluted $ (1.97 ) $ (2.24 ) The computation of basic loss per share for the years ended March 31, 2021 and 2020 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. March 31, (In thousands) 2021 2020 Common stock to be issued upon vesting of restricted stock units 1 2 Common stock to be issued upon exercise of options 268 378 Common stock to be issued upon exercise of warrants 119 320 Common stock to be issued upon conversion of Series C – 17 Common stock to be issued upon exercise of common stock units (1) 46 46 434 763 (1) Consists of 30,668 restricted stock units and warrants to purchase 15,332 shares of common stock 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. The company currently does not have any active derivative financial instruments. 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. Subsequent Events Management has evaluated subsequent events or transactions occurring through the date these consolidated financial statements were issued. Adoption of Recent Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income Recent Accounting Standards The Company has evaluated all the recent accounting standards and determined that none of them are material to it. |
4. Sale of Assets - Discontinue
4. Sale of Assets - Discontinued Operations | 12 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Sale of Assets - Discontinued Operations | NOTE 4. Sale of Assets – Discontinued Operations Sale of Product Rights to Microsafe Group, DMCC On February 21, 2020, the Company closed on an Asset Purchase Agreement for the sale of certain wound care and animal health product rights and assets for the Middle East and disinfectant rights for the European and Australian markets to Microsafe Group, DMCC (“Microsafe”), an international distributor. The purchase price for the product rights and assets was $1,100,000. The Company agreed that it will continue to supply products to Petagon for five years at certain agreed upon transfer prices. The sale involves certain Asian patents and trademarks, and the exclusive right to distribute animal health care products in Asia and Europe. The Company determined that there were two separate performance obligations under the Asset Purchase Agreement. These performance obligations were the delivery of production equipment to Petagon as a security and the transfer of the intellectual property and territory rights. The Company estimated the value of the production equipment by determining the cost and applying a mark up to the selling price at a market participant margin. The Company then applied the residual approach to derive the fair value of the intellectual property and territory rights. The Company will provide product under a reduced price from its prior list price. The Company will incur costs of approximately $75,000 to fulfill its obligations to deliver certain production equipment to Microsafe. The proceeds from the sale were allocated to the components of the sale utilizing the residual approach as follows: Total proceeds $ 1,100,000 Less - Production equipment (150,000 ) Residual attributable to the intellectual property and territory rights $ 950,000 The proceeds related to the production equipment are included in deferred revenue and will be recognized upon delivery of the equipment. The proceeds related to the intellectual property and territory rights are included in gain on sale on the closing date. Sale of Assets to Infinity Labs SD, Inc. and Discontinued Operations On June 24, 2020, the Company closed on an asset purchase agreement for the sale of its Micromed Laboratories division and testing facility, including all of Micromed’s assets, such as testing equipment, certain office furniture and customer list, with Infinity Labs SD Inc. (“Infinity”) for an aggregate purchase price of $850,000. On the closing date, the Company received $610,000 in cash from this sale which was adjusted for working capital, a credit of $100,000 for future testing services from Infinity over the next two years in lieu of cash, and $60,000 held in escrow for one year, subject to adjustment for certain indemnity claims or purchase price adjustments. The Company also retained its accounts receivables outstanding on the date of closing in the amount of approximately $81,000 and an insignificant amount of liabilities. As part of the transaction, Infinity also assumed the Petaluma lease for the office and lab space. The Company retained the warehouse space to store inventory and assets until September 30, 2020. Accounting for the disposition For accounting purposes, the Company determined that there was only one discrete component of the sale to Infinity. This component was the customer base and related services to be provided. Component of Sale Methodology to Estimate Selling Price Customer Base Based upon revenues expected from a market participant to provide technical services at expected service levels The Company determined an arm’s length selling price for each component of the sale and then allocated the net proceeds received to the components on a relative selling price basis. The Company estimated the selling prices of each component as described below: Proceeds were allocated to the components of the sale based upon their relative selling prices are as follows: Customer base $ 850,000 Less: Funds remaining in escrow (60,000 ) Less: Services due from buyer (100,000 ) Less: Working capital adjustment (80,000 ) Total proceeds $ 610,000 Discontinued operations As of June 24, 2020, the Company determined that the sale of its Micromed division to Infinity qualified as a sale of a component of its business and, as such, all such activity prior to consummation of the sale is required to be included in discontinued operations on the Company’s statement of operations. The carrying value of the assets and liabilities of discontinued operations on the consolidated balance sheets as of March 31, 2021 and March 31, 2020 were as follows: March 31, 2021 March 31, 2020 Assets Non-current assets held for sale $ – $ 704,000 Liabilities Liabilities associated with assets currently held for sale $ – $ 646,000 The operations of the Micromed business included in discontinued operations is summarized as follows: Year ended March 31, 2021 2020 Revenues $ 214,000 $ 1,008,000 Cost of revenues 53,000 521,000 Selling general and administrative expenses 38,000 130,000 Income from discontinued operations before tax 123,000 357,000 Gain on disposal of discontinued operations before income taxes 770,000 – Total income from discontinued operations, before tax 893,000 357,000 Income Tax benefit (expense) (228,000 ) (92,000 ) Income from discontinued operations, net of tax $ 665,000 $ 265,000 |
5. Accounts Receivable
5. Accounts Receivable | 12 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 5 – Accounts Receivable Accounts receivable, net consists of the following: March 31, 2021 2020 Accounts receivable $ 4,419,000 $ 6,231,000 Less: allowance for doubtful accounts (125,000 ) (1,028,000 ) Less: discounts, rebates, distributor fees and returns (1,488,000 ) (1,230,000 ) $ 2,806,000 $ 3,973,000 |
6. Inventories
6. Inventories | 12 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Inventories | NOTE 6 – Inventories Inventories consist of the following: March 31, 2021 2020 Raw materials $ 1,670,000 $ 1,128,000 Finished goods 860,000 1,053,000 $ 2,530,000 $ 2,181,000 |
7. Prepaid Expenses and Other C
7. Prepaid Expenses and Other Current Assets | 12 Months Ended |
Mar. 31, 2021 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Prepaid Expenses and Other Current Assets | NOTE 7 – Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following: March 31, 2021 2020 Prepaid insurance $ 705,000 $ 523,000 Prepaid rebates – – Tax prepaid to Mexican tax authorities 1,850,000 1,305,000 Other prepaid expenses and other current assets 663,000 428,000 $ 3,218,000 $ 2,256,000 |
8. Property and Equipment
8. Property and Equipment | 12 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | NOTE 8 – Property and Equipment Property and equipment consists of the following: March 31, 2021 2020 Manufacturing, lab, and other equipment $ 1,170,000 $ 3,008,000 Office equipment 109,000 376,000 Furniture and fixtures 66,000 102,000 Leasehold improvements 486,000 481,000 1,831,000 3,967,000 Less: accumulated depreciation and amortization (1,471,000 ) (3,602,000 ) $ 360,000 $ 365,000 Depreciation and amortization expense amounted to $227,000 and $312,000 for the years ended March 31, 2021 and 2020, respectively. For the years ended March 31, 2021, the Company incurred a loss of $0 and $18,000, respectively, on the disposal of property and equipment. |
9. Accrued Expenses and Other C
9. Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | NOTE 9 – Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consist of the following: March 31, 2021 2020 Salaries and related costs $ 787,000 $ 1,078,000 Professional fees – 234,000 Other 367,000 462,000 $ 1,154,000 $ 1,774,000 |
10. Common Stock Liability
10. Common Stock Liability | 12 Months Ended |
Mar. 31, 2021 | |
Effect of state operating loss expiration | |
Common Stock Liability | NOTE 10 – Common Stock Liability On October 4, 2018, the Company sold 12,556 shares of common stock, at a price of $21.51 per share, through its At Market Issuance Sales Agreement with B. Riley FBR, Inc. for gross proceeds of $270,000 and net proceeds of $262,000 after deducting commissions and other offering expenses. This sale exceeded the aggregate market value of the Company’s securities sold during the period of twelve calendar months prior to the sale of one-third of the aggregate market value of its common stock held by non-affiliates, and thus, the 12,556 shares of common stock were unregistered. The Company could be liable in the event claims or suits for rescission are brought and successfully concluded for failure to register these securities or for acts or omissions constituting offenses under the Securities Act, the Securities Exchange Act of 1934, or applicable state securities laws. The Company could be liable for damages and penalties assessed by the SEC and state securities regulators. Accordingly, at March 31, 2019, the Company recorded a $270,000 liability in the accompanying consolidated balance sheet. The statute of limitations expired in October 2019, and as a result the liability was released and was reclassified to equity on the Company’s consolidated balance sheet at March 31, 2020. |
11. Long-Term Debt
11. Long-Term Debt | 12 Months Ended |
Mar. 31, 2021 | |
Debt Disclosure [Abstract] | |
Long-Term Debt | NOTE 11 – Long-Term Debt Financing of Insurance Premiums On February 1, 2020, the Company entered into a note agreement for $534,000 with an interest rate of 5.48% per annum with final payment on December 1, 2019. This instrument was issued in connection with financing insurance premiums. The note is payable in monthly installments of $53,000. During the year ended March 31, 2020, the Company made principal and interest payments in the amounts of $53,000 and $2,000, respectively. The note was paid during the fiscal year 2021. On February 1, 2021, the Company entered into a note agreement for $584,000 with an interest rate of 4.98% per annum with final payment on October 1, 2021. This instrument was issued in connection with financing insurance premiums. The note is payable in three quarterly installment payments of principal and interest of $199,000, with the first installment beginning April 1, 2021. Paycheck Protection Program Loan On May 1, 2020, the Company received loan proceeds in the amount of $1,310,000 under the Paycheck Protection Program (“PPP”), from Coastal States Bank in Atlanta, Georgia. The PPP, established as part of the Coronavirus Aid, Relief and Economic Security Act, “CARES Act”, provides for loans to qualifying businesses for amounts up to 2.5 times of the average monthly payroll expenses of the qualifying business. The loans and accrued interest are forgivable after eight or 24 weeks as long as the Company uses the loan proceeds for eligible purposes, including payroll, benefits, rent and utilities, and maintains payroll levels. The amount of loan forgiveness will be reduced if the Company terminated employees or reduced salaries during the applicable period. The unsecured loan, which is in the form of a note dated April 29, 2020, matures on April 29, 2022 and bears interest at a rate of 1% per annum, payable monthly commencing on May 1, 2021. The note may be prepaid at any time prior to maturity with no prepayment penalties. The Company has used the loan amount for eligible purposes, such as payroll expenses. The Company currently believes that its use of the loan proceeds will meet the conditions for $730,000 in forgiveness of the loan. |
12. Leases
12. Leases | 12 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Leases | NOTE 12 – Leases The Company's operating leases are comprised primarily of facility leases. Finance leases are comprised primarily of vehicle leases. Balance sheet information related to our leases is presented below: March 31, March 31, 2021 2020 Operating leases: Operating lease right-of-use assets $ 769,000 $ 671,000 Operating lease liabilities – current 240,000 200,000 Operating lease liabilities – non-current 529,000 471,000 Finance leases: Property, plant and equipment – – Current portion of financing leases – – Other information related to leases is presented below: Year ended March 31, 2021 Lease cost Operating lease cost $ 435,000 As of March 31, 2021 Other information: Operating cash flows from operating leases $ (215,000 ) Weighted-average remaining lease term – operating leases (in months) 37.7 Weighted-average discount rate – operating leases 6.00% As of March 31, 2021, the annual minimum lease payments of our operating lease liabilities were as follows: For Years Ending March 31, 2022 $ 296,000 2023 261,000 2024 194,000 2025 110,000 Thereafter 6,000 Total future minimum lease payments, undiscounted 867,000 Less: imputed interest (98,000 ) Present value of future minimum lease payments $ 769,000 |
13. Commitments and Contingenci
13. Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13 – Commitments and Contingencies Legal Matters On occasion, the Company 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 and financial condition of comprehensive loss. Employment Agreements As of March 31, 2021, the Company had employment agreements in place with two of its key executives. These executive employment agreements provide, among other things, for the payment of up to twelve months of severance compensation for terminations under certain circumstances. With respect to these agreements, at March 31, 2021, aggregated annual salaries would be $550,000 and potential severance payments to these key executives would be $550,000 if triggered. Effective on December 26, 2019, the Company entered into a new employment agreement with its Chief Executive Officer, Amy Trombly, after her prior agreement expired on December 25, 2019 pursuant to its terms. The employment agreement is effective as of December 26, 2019, and has a term until December 31, 2020, subject to mutual extension by three-month increments. The Company agreed to continue to pay Ms. Trombly a base salary of $25,000 per month, and to provide standard medical, dental and vacation benefits. Ms. Trombly will be eligible for a bonus of up to $150,000 per year upon the completion of certain agreed-upon goals based on the sole discretion of the Compensation Committee. As was the case with her old agreement, certain legal services not provided by Ms. Trombly will continue to be billed by Trombly Business Law, PC. The Board also agreed that during her time as Chief Executive Officer, Ms. Trombly may continue to represent other clients in her role as attorney. The employment agreement may be terminated by the Company or Ms. Trombly upon sixty days’ written notice at any time and for any reason. Upon termination of the agreement Ms. Trombly agreed to resign from any and all directorships and every other position held by the executive with the Company or any of its subsidiaries, and to return to the Company of all property she received from or on account of the Company. On January 4, 2021, the Company entered into an addendum to the employment agreement with its Chief Executive Officer, Amy Trombly, after her prior agreement expired on December 31, 2020 pursuant to its terms. The parties agreed to extend the term of the employment agreement until March 31, 2021, to sync up the term of the employment agreement to our fiscal year. The addendum adds termination provisions for cause and change of control similar to other Company agreements. In the event Ms. Trombly is terminated without cause or for change in control, she is entitled to: · a lump sum severance payment equal to six months her base salary for termination without cause or one time her base salary for termination upon change of control; · automatic vesting of all unvested time-based options and equity awards; · vesting of performance-based equity compensation awards in accordance with the terms of the awards, if the performance goals are satisfied, such determination to be in the sole discretion of the Compensation Committee or the Board, as the case may be; and · reimbursement for health care premiums under COBRA until the earliest of: (i) one year following the date of termination; (ii) the date she is no longer eligible to receive COBRA continuation coverage; or (iii) until she becomes eligible for medical insurance coverage provided by another employer. In case of termination without cause, Ms. Trombly may also be awarded a bonus, upon determination by the Corporation’s Board of Directors or Compensation Committee, as appropriate, to be made in its sole discretion as to whether to grant a bonus, and if such bonus is granted, the amount, form and payment schedule. For the avoidance of doubt, Ms. Trombly shall not be entitled to any bonus solely for reason of termination, unless the Board of Directors or the Compensation Committee, as appropriate, in its sole discretion awards such bonus. Upon termination for any reason any outstanding equity awards shall remain exercisable for 18 months. In addition, Ms. Trombly is not entitled to certain benefits if she did not comply with the non-competition or the confidentiality provisions of the employment agreement, whether during or after the terms of her employment. Furthermore, the Company is under no obligation to pay the above-mentioned benefits if Ms. Trombly does not comply with the non-solicitation provisions of the employment agreement, which prohibit a terminated executive from interfering with the business relations of our Company or any of our affiliates and from soliciting employees of the Company. These provisions apply during the term of employment and for two years following termination. Related Party Transactions Ms. Trombly was appointed the Chief Executive Officer of the Company. Ms. Trombly is the owner of Trombly Business Law, PC which has been retained by the Company to advise on certain corporate and securities law matters. During the years ending March 31, 2021 and March 31, 2020, the Company received $215,000 and $255,000, respectively, in legal services from Trombly Business Law, PC. |
14. Stockholders' Equity
14. Stockholders' Equity | 12 Months Ended |
Mar. 31, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | NOTE 14 – Stockholders’ Equity Authorized Capital Effective September 13, 2018, the Company filed a certificate of amendment to its Restated Certificate of Incorporation, as amended, with the Secretary of State of the State of Delaware in order to affect an increase of the total number of shares of common stock, $0.0001 par value per share, authorized for issuance from 12,000,000 to a total of 24,000,000. Additionally, the Company is authorized to issue 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. Description of Series B Preferred Stock On October 18, 2016, the Company’s board of directors approved, and the Company entered into, a Section 382 rights agreement, or the Rights Agreement, with Computershare Inc., or the Rights Agent. The Rights Agreement provides for a dividend of one preferred stock purchase right, or a Right, for each share of common stock, par value $0.0001 per share, of the Company outstanding on November 1, 2016, or the Record Date. Each Right entitles the holder to purchase from the Company one one-thousandth of a share of Series B Preferred Stock, par value $0.0001 per share, or the Preferred Stock, for a purchase price of $10.00, subject to adjustment as provided in the Rights Agreement. The description and terms of the rights are set forth in the Rights Agreement. In connection with the adoption of the Rights Agreement, the Company’s board of directors adopted a Certificate of Designation of Series B Preferred Stock. The Certificate of Designation was filed with the Secretary of State of the State of Delaware and became effective on October 18, 2016. The Company’s board of directors adopted the Rights Agreement to protect shareholder value by guarding against a potential limitation on the Company’s ability to use its net operating loss carryforwards, or NOLs, and other tax benefits, which may be used to reduce potential future income tax obligations. The Company has experienced and continue to experience substantial operating losses, and under the Internal Revenue Code of 1986, as amended, and rules promulgated thereunder, the Company may “carry forward” these NOLs and other tax benefits in certain circumstances to offset any current and future earnings and thus reduce our income tax liability, subject to certain requirements and restrictions. To the extent that the NOLs and other tax benefits do not otherwise become limited, the Company believes that it will be able to carry forward a significant amount of NOLs and other tax benefits, and therefore these NOLs and other tax benefits could be a substantial asset to the Company. However, if the Company experiences an “ownership change,” as defined in Section 382 of the Code, its ability to use its NOLs and other tax benefits will be substantially limited. Generally, an ownership change would occur if our shareholders who own, or are deemed to own, 5% or more of the Company’s common stock increase their collective ownership in the Company by more than 50% over a rolling three-year period. Exercise of Series C Preferred Stock Units During the year ended March 31, 2021, investors who participated in the transaction exchanged 1.55 shares of Series C into 17,222 shares of common stock. No further shares of Series C are outstanding as of March 31, 2021. |
15. Stock-Based Compensation
15. Stock-Based Compensation | 12 Months Ended |
Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Stock-Based Compensation | NOTE 15 – 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 provided for the granting of incentive stock options to employees and the granting of non-statutory stock options to employees, non-employee directors, advisors and consultants. The 2006 Plan also provided 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. At March 31, 2021 there were no shares available for future issuance. 2011 Stock Plan On September 12, 2011, upon recommendation of the board, the stockholders 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 initially authorized 9,508 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 non-statutory 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 2,381 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, 2019, the board of directors approved an increase of 102,863 shares authorized for issuance. During the year ended March 31, 2020, the board of directors approved an increase of 197,450 shares authorized for issuance. At March 31, 2021 there were 351,139 shares available for future issuance. 2016 Stock Plan On September 2, 2016, upon recommendation of the board, the stockholders approved the Company’s 2016 Equity Incentive Plan (the “2016 Plan”). The 2016 Plan is effective as of September 2, 2016. The 2016 Plan provides for the grant of options, including incentive stock options as defined in Section 422 of the Internal Revenue Code to employees, stock appreciation rights, restricted awards, performance share awards and performance compensation awards to employees, non-employee directors, advisors and consultants. Options issued under the 2016 Plan will generally have a ten-year term. In accordance with the 2016 Plan, the stated exercise price of an employee incentive stock option or a non-statutory 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. 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 2016 Plan. No participant in the 2016 Plan can receive more than 11,112 option grants, or other awards with respect to more than 13,334 shares in the aggregate in any calendar year. The board has authorized 44,445 of the Company’s common stock for issuance under the 2016 Plan, in addition to automatic increases provided for in the 2016 Plan through April 1, 2026. The number of shares of the Company’s common stock reserved for issuance under the 2016 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) 8% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding year, or (ii) an amount determined by the Company’s board of directors. During the year ended March 31, 2019, the board of directors approved an increase of 4,860 shares authorized for issuance. During the year ended March 31, 2020, the board of directors approved an increase of 105,306 shares authorized for issuance. At March 31, 2021 there were 87,477 shares available for future issuance. 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 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, 2021 2020 Fair value of the Company’s common stock on date of grant $ 8.03 $ 4.36 Expected term 6.00 yrs 5.30 yrs Risk-free interest rate 0.5800% 1.6993% Dividend yield 0.00% 0.00% Volatility 80.7% 122.4% Fair value of options granted $ 5.48 $ 3.69 Share-based awards compensation expense is as follows: Year Ended March 31, 2021 2020 Cost of revenues $ (27,000 ) $ 94,000 Research and development 26,000 102,000 Selling, general and administrative 372,000 643,000 Total stock-based compensation $ 371,000 $ 839,000 At March 31, 2021, there were unrecognized compensation costs of $624,000 related to stock options which is expected to be recognized over a weighted-average amortization period of 2.77 years. At March 31, 2021, there were unrecognized compensation costs of $5,000 related to restricted stock which is expected to be recognized over a weighted-average amortization period of 0.47 years. A tax benefit of $403,000 has been recognized relating to stock-based compensation as a result of non-qualified stock options and restricted stock exercised during the year ending March 31, 2021. In addition, the stock based compensation deferred tax asset has been reduced by $2,368,000 primarily related to the expiration of stock compensation grants. Stock-Based Award Activity Stock-based awards outstanding at March 31, 2021 under the various plans are as follows: Unvested Plan Stock Options Restricted Stock Total 2006 Plan 4,431 – 4,431 2011 Plan 155,226 – 155,226 2016 Plan 107,912 833 108,745 267,569 833 268,402 Stock-based awards available for grant as of March 31, 2021 438,616 Stock options award activity is as follows: Number of Weighted- Weighted- Aggregate Outstanding at April 1, 2020 378,000 $ 26.55 Options granted 228,331 8.03 Options exercised (93,301 ) 5.48 Options forfeited (218,976 ) 7.03 Options expired (26,485 ) 116.51 Outstanding at March 31, 2021 267,569 $ 25.16 8.12 $ 646,878 Exercisable at March 31, 2021 144,238 $ 39.81 6.70 $ 265,927 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 $7.43 per share at March 31, 2021. 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, 2020 1,666 $ 13.68 Restricted stock awards granted 5,695 4.79 Restricted stock awards vested (6,528 ) 5.93 Unvested restricted stock awards outstanding at March 31, 2021 833 $ 13.68 The Company did not capitalize any cost associated with stock-based compensation. The Company issues new shares of common stock upon exercise of stock options or release of restricted stock awards. |
16. Income Taxes
16. Income Taxes | 12 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 16 – Income Taxes The Company has the following net deferred tax assets: March 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 25,687,000 $ 27,948,000 Research and development tax credit carryforwards 1,850,000 1,850,000 Stock-based compensation 3,120,000 3,803,000 Allowances and accruals 659,000 1,099,000 Other deferred tax assets 398,000 731,000 State income taxes – 1,000 Basis difference in assets – 6,000 Lease liability 78,000 226,000 Gross deferred tax assets $ 31,792,000 $ 35,664,000 Less valuation allowance (31,528,000 ) (35,297,000 ) Total deferred tax assets $ 264,000 $ 367,000 Deferred tax liabilities: Fixed assets (3,000 ) (5,000 ) Prepaid expenses (186,000 ) (143,000 ) Right of Use asset (75,000 ) (219,000 ) Gross deferred tax liabilities (264,000 ) (367,000 ) Net deferred tax assets $ – $ – The income tax provision (benefit) is based on the following loss before income taxes, which are from domestic sources and foreign loss before income taxes: Year Ended March 31, 2021 2020 Domestic $ 2,052,000 $ 1,425,000 Foreign 1,467,000 227,000 $ 3,519,000 $ 1,652,000 The Company’s income tax expense/(benefits) consist of the following: Year Ended March 31, 2021 2020 Current: State $ 1,000 $ 3,000 Foreign 941,000 118,000 942,000 121,000 Deferred: Federal – – State – – Foreign – – $ 942,000 $ 121,000 A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for continuing operations is as follows: Year Ended March 31, 2021 2020 Expected federal statutory rate 21.0% 21.0% State income taxes 2.1% 11.0% Foreign earnings taxed at different rates 3.6% 0.6% Foreign tax true-up (12.4% ) Effect of state net operating loss expiration (0.0% ) (0.1% ) Effect of permanent differences (9.5% ) (14.0% ) Effect of intercompany interest permanent differences (17.9% ) 5.6% True-up of state deferred assets (120.7% ) (19.9% ) GILTI income (0.0% ) (1.4% ) (133.8% ) 2.8% Change in valuation allowance 107.1% (10.1% ) Totals (26.7% ) (7.3% ) As of March 31, 2021, we had net operating loss carryforwards for Federal, State and Foreign income tax purposes of approximately $105.1 million, $38.1 million and $1.1 million, respectively. Due to the Tax Cuts and Job Act, Federal NOL generated after March 31, 2018 have an indefinite life. Federal NOL generated on and before March 31, 2017 will begin to expire 2024, if not utilized. State and Foreign NOLs will either begin to in the year 2029 and 2028, respectively, if not utilized. As of March 31, 2021, we had Federal and California research credit carryforward of approximately $1 million and $790,000, respectively. The Federal research credits will begin to expire in 2024 while the California research credits have no expiration date. In addition, we have foreign tax credit of $50,000, which begins to expire in the year 2023 if not utilized. Section 382 of the Internal Revenue Code limits the use of the Federal net operating losses in certain situations where changes occur in stock ownership of a company. If the Company should have an ownership change of more than 50% of the value of the Company's capital stock, utilization of the carryforwards could be restricted. The Company is not aware of any changes in ownership that would result in a change in control under Internal Revenue Code section 382. The Company, after considering all available evidence, fully reserved against all 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 financial reporting for the year ended March 31, 2021. However, for income tax purposes, the Company is in income position. In the current year there are certain non-recurring sales and significant temporary adjustments that will reverse in future years which contributed to the taxable loss. The Company anticipates losses in the future for both financial accounting and tax purposes. 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. 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 financial statements. The Company has identified its federal tax return and its state tax returns in California and Georgia as major tax jurisdictions. The Company also filed tax returns in foreign jurisdictions, principally Mexico and The Netherlands. The Company does not consider itself indefinitely invested in its foreign subsidiaries. The Company has accrued taxes, where necessary, related to the U.S. investment and intercompany transactions between the parties. The Company’s evaluation of uncertain tax matters was performed for tax years ended through March 31, 2021. Generally, the Company is subject to audit for the years ended March 31, 2020, 2019 and 2018 and may be subject to audit for amounts relating to net operating loss carryforwards generated in periods prior to March 31, 2020. 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, other than those identified above that would result in a material change to its financial position. On March 27, 2021 Congress approved and the President signed the Coronavirus Aid Relief, and Economic Security ("CARES") Act. The CARES Act is an emergency economic stimulus package in response to the COVID-19 pandemic, which among other things contains numerous income tax provisions. On December 27, 2020, the President signed The Consolidated Appropriations Act, 2021 (the "Act") which included a number of tax provisions to extend and further provide relief to those impacted by the COVID-19 pandemic. The Company considered the various potential income tax provisions and deemed that there were no material impacts to the income tax provision as of year-end March 31, 2021. |
17. Employee Benefit Plan
17. Employee Benefit Plan | 12 Months Ended |
Mar. 31, 2021 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | NOTE 17 – Employee Benefit Plan The Company has a program to contribute and administer a qualified 401(k) plan. Under the 401(k) plan, the Company matches employee contributions to the plan up to 4% of the employee’s salary. Company contributions to the plan amounted to an aggregate of $89,000 and $155,000 for the years ended March 31, 2021 and 2020, respectively. |
18. Geographic Information
18. Geographic Information | 12 Months Ended |
Mar. 31, 2021 | |
Segment Reporting [Abstract] | |
Geographic Information | NOTE 18 – 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 Company’s product revenues by geographic region: Year Ended March 31, 2021 2020 United States $ 5,419,000 $ 7,991,000 Latin America 5,864,000 3,622,000 Europe and Rest of the World 7,234,000 6,164,000 Total $ 18,517,000 $ 17,777,000 The Company’s service revenues in Latin America amounted to $112,000 and $151,000 for the years ended March 31, 2021 and 2020, respectively. |
19. Subsequent Events
19. Subsequent Events | 12 Months Ended |
Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 19 – Subsequent Events Employment Agreement with our Chief Executive Officer Effective on July 1, 2021, the Company entered into a new employment agreement with its Chief Executive Officer, Amy Trombly, after her prior agreement expired pursuant to its terms. The Company agreed to pay Ms. Trombly a base salary of $325,000 per annum, and to provide standard medical, dental and vacation benefits. Ms. Trombly will be eligible for a bonus of up to $390,000 per year upon the completion of certain agreed-upon goals based on the sole discretion of the Compensation Committee, although the target annual bonus is no more than $162,500 per year. She is also eligible for annual equity grants in the sole discretion of the Compensation Committee. As was the case with her old agreement, certain legal services not provided by Ms. Trombly will continue to be billed by Trombly Business Law, PC. The Board also agreed that during her time as Chief Executive Officer, Ms. Trombly may continue to represent other clients in her role as attorney. The employment agreement provides Ms. Trombly with certain separation benefits in the event of termination without cause, for good reason or change of control, as such terms are defined in the employment agreement. In the event Ms. Trombly is terminated without cause, or for good reason or upon change of control, she is entitled to: · a lump sum severance payment equal to six months of her base salary upon termination without cause or for good reason, and twelve months her base salary upon termination for change of control; · upon termination without cause or for good reason a pro-rata bonus, upon determination by the Corporation’s Board of Directors or Compensation Committee, as appropriate, to be made in its sole discretion as to whether to grant a bonus, and a target annual bonus amount of $162,500 upon termination upon change of control. The amount, form and payment schedule of such bonus shall be determined by the Compensation Committee. For the avoidance of doubt, Ms. Trombly shall not be entitled to any bonus solely for reason of termination, unless the Board of Directors or the Compensation Committee, as appropriate, in its sole discretion awards such bonus; · automatic vesting of all unvested time-based options and equity awards; · vesting of performance-based equity compensation awards in accordance with the terms of the awards, if the performance goals are satisfied, such determination to be in the sole discretion of the Compensation Committee or the Board, as the case may be; and · reimbursement for health care premiums under COBRA until the earliest of: (i) six or twelve months following the date of termination depending on the reason for termination; (ii) the date she is no longer eligible to receive COBRA continuation coverage; or (iii) until she becomes eligible for medical insurance coverage provided by another employer. Either party may terminate the employment agreement for any reason upon at least 60 days prior written notice. Upon termination for any reason, all vested equity awards will remain exercisable for 18 months following the termination. Receipt of the termination benefits described above is contingent on executing a general release of claims against our Company, resignation from any and all directorships and every other position held by the executive with our Company or any of our subsidiaries, and return of all Company property. In addition, Ms. Trombly will be required to comply with the confidentiality, non-compete, anti-solicitation and non-disparagement provisions of the employment agreement during the term of employment and for two years following termination. Employment Agreement with our Chief Financial Officer Effective on July 1, 2021, the Company entered into as employment agreement with our Chief Financial Officer, Jerry Dvonch. The Company agreed to pay Mr. Dvonch a base salary of $200,000 per year, and to provide standard medical, dental and vacation benefits. Mr. Dvonch will be eligible for a bonus of up to $240,000 per year upon the completion of certain agreed-upon goals based on the sole discretion of the Compensation Committee, although the target annual bonus is no more than $100,000 per year. He is also eligible for annual equity grants in the sole discretion of the Compensation Committee. The employment agreement provides Mr. Dvonch with certain separation benefits in the event of termination without cause, for good reason or upon change of control, as such terms are defined in the employment agreement. In the event Mr. Dvonch is terminated without cause, for good reason or upon change of control, he is entitled to: · a lump sum severance payment equal to six months of his base salary upon termination without cause or for good reason, and twelve months his base salary upon termination for change of control; · upon termination without cause or for good reason a pro-rata bonus, upon determination by the Corporation’s Board of Directors or Compensation Committee, as appropriate, to be made in its sole discretion as to whether to grant a bonus, and a target annual bonus amount of $100,000 upon termination upon change of control. The amount, form and payment schedule of such bonus shall be determined by the Compensation Committee. For the avoidance of doubt, Mr. Dvonch shall not be entitled to any bonus solely for reason of termination, unless the Board of Directors or the Compensation Committee, as appropriate, in its sole discretion awards such bonus; · automatic vesting of all unvested time-based options and equity awards; · vesting of performance-based equity compensation awards in accordance with the terms of the awards, if the performance goals are satisfied, such determination to be in the sole discretion of the Compensation Committee or the Board, as the case may be; and · reimbursement for health care premiums under COBRA until the earliest of: (i) six or twelve months following the date of termination depending on the reason for termination; (ii) the date he is no longer eligible to receive COBRA continuation coverage; or (iii) until he becomes eligible for medical insurance coverage provided by another employer. Either party may terminate the employment agreement for any reason upon at least 60 days prior written notice. Upon termination for any reason, all vested equity awards will remain exercisable for 18 months following the termination. Receipt of the termination benefits described above is contingent on executing a general release of claims against our Company, resignation from any and all directorships and every other position held by the executive with our Company or any of our subsidiaries, and return of all Company property. In addition, Mr. Dvonch will be required to comply with the confidentiality, non-compete, anti-solicitation and non-disparagement provisions of the employment agreement during the term of employment and for two years following termination. Employment Agreement with Mr. Bruce Thornton Effective on July 1, 2021, the Company entered into a new employment agreement with Bruce Thornton, our Chief Operating Officer. The terms of the employment agreement provide for an annual salary of $250,000 for Mr. Thornton. Mr. Thornton also receives certain benefits, such as participation in our health and welfare plans, vacation and reimbursement of expenses and a car allowance. Mr. Thornton will be eligible for a bonus of up to $300,000 per year upon the completion of certain agreed-upon goals based on the sole discretion of the Compensation Committee, although the target annual bonus is no more than $125,000 per year. He is also eligible for annual equity grants in the sole discretion of the Compensation Committee. As was the case with his prior agreement, the employment agreement provides Mr. Thornton with certain separation benefits in the event of termination without cause, for good reason or upon change of control, as such terms are defined in the employment agreement. In the event Mr. Thornton is terminated without cause, for good reason or upon a change of control, he is entitled to: · a lump sum severance payment equal to one time his base salary; · a pro-rata bonus, upon determination by the Corporation’s Board of Directors or Compensation Committee, as appropriate, to be made in its sole discretion as to whether to grant a bonus, and if such bonus is granted, the amount, form and payment schedule. For the avoidance of doubt, Mr. Thornton shall not be entitled to any bonus solely for reason of termination, unless the Board of Directors or the Compensation Committee, as appropriate, in its sole discretion awards such bonus; · automatic vesting of all unvested time-based options and equity awards and exercisability of awards for the remainder of their respective terms; · vesting of performance-based equity compensation awards in accordance with the terms of the awards, if the performance goals are satisfied, such determination to be in the sole discretion of the Compensation Committee or the Board, as the case may be; and · reimbursement for health care premiums under COBRA until the earliest of: (i) one year following the date of termination; (ii) the date he is no longer eligible to receive COBRA continuation coverage; or (iii) until he becomes eligible for medical insurance coverage provided by another employer. Mr. Thornton may terminate his employment for any reason upon at least 30 days prior written notice. Receipt of the termination benefits described above is contingent on executing a general release of claims against the Company, resignation from any and all directorships and every other position held by him with our Company or any of our subsidiaries, and return of all Company property. In addition, Mr. Thornton is not entitled to such benefits if he does not comply with the non-competition and invention assignment provisions of his employment agreement during the term of his employment or the confidentiality, non-solicitation and non-disparagement provisions of the employment agreement, during and for two years after his termination. |
3. Summary of Significant Acc_2
3. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2021 | |
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 Sonoma Pharmaceuticals Netherlands, B.V. (“SP Europe”). Aquamed has no current operations. All significant intercompany accounts and transactions have been eliminated in consolidation. The functional currency for the Company's wholly-owned subsidiaries incorporated outside the United States (“U.S.”) is the U.S. dollar. All intercompany transactions and balances have been eliminated in consolidation. |
Basis of presentation | Basis of presentation The accompanying consolidated financial statements have been prepared by us pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC") and are in conformity with U.S. generally accepted accounting principles ("GAAP"). Our fiscal year end is March 31. Unless otherwise stated, all years and dates refer to our fiscal year. |
Correction of an Immaterial Misstatement in a Prior Period Financial Statement | Correction of an Immaterial Misstatement in a Prior Period Financial Statement During the year ended March 31, 2021, the Company discovered that it had failed to accrue withholding taxes that would become due to Mexico upon the payment of interest and royalties from the Mexico subsidiary OTM to the United States parent. Due to the large net operating losses in the United States, there would be no benefit available for a subsequent foreign tax credit on the United States tax return, resulting in a net tax expense. The error understated by an immaterial amount the SG&A expenses for each year from the year ended March 31, 2004 to March 31, 2020 as well as understated net loss. The net impact to the opening balance of retained earnings for the year ended March 31, 2020 would be $2,720,000 and the effect to the profit and loss statement would have been $362,000 for the year ended March 31, 2020. Based on an analysis of Accounting Standards Codification (“ASC”) 250 – “Accounting Changes and Error Corrections” (“ASC 250”), Staff Accounting Bulletin 99 – “Materiality” (“SAB 99”) and Staff Accounting Bulletin 108 – “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”), the Company determined that these errors were immaterial to the previously issued financial statements, and as such no restatement was necessary. Correcting prior period financial statements for immaterial errors would not require previously filed reports to be amended. Such correction may be made the next time the registrant files the prior period financial statements. Accordingly, the misstatements were corrected during the period ended March 31, 2021 in the accompanying balance sheet as of March 31, 2020 and statements of operations for the twelve months ended March 31, 2020. The effects of the revision to the balance sheet as of March 31, 2020 are as follows (in thousands): As Previously Reported Adjustment As Revised SG&A expense – 362 362 Net loss (2,946 ) 362 (3,308 ) Withholding tax payable – (3,082 ) 3,082 Retained earnings (172,244 ) 3,082 (175,326 ) |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and all highly liquid investments with an original maturity of three months or less when purchased. Our cash equivalents are held in prime money market investments with strong sponsor organizations which are monitored on a continuous basis. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the dates of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Significant estimates and assumptions include reserves and write-downs related to receivables and inventories, the recoverability of long-lived assets, the valuation allowance relating to the Company’s deferred tax assets, valuation of equity and derivative instruments, fair value allocation of assets sold to Invekra, and the estimated amortization periods of upfront product licensing fees received from customers. Periodically, the Company evaluates and adjusts estimates accordingly. |
Revenue Recognition | Revenue Recognition On April 1, 2018, the Company adopted Accounting Standards Update ("ASU"), "Revenue from Contracts with Customers Topic 606” (“Topic 606”) using the modified retrospective method. There was no material impact to the Company upon the adoption of Topic 606. Revenue is recognized when the Company transfers promised goods or services to the customer, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. In determining the appropriate amount of revenue to be recognized as the Company fulfills its obligations under the agreement, the Company performs the following steps: (i) identification of the promised goods or services in the contract; (ii) determination of whether the promised goods or services are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation. The Company only applies the five-step model to contracts when it is probable that it will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company derives the majority of its revenue through sales of its products directly to end users and to distributors. The Company also sells products to a customer base, including hospitals, medical centers, doctors, pharmacies, distributors and wholesalers. The Company also has 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 considers customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. For each contract, the Company considers the promise to transfer products, each of which are distinct, to be the identified performance obligations. In determining the transaction price the Company evaluates whether the price is subject to refund or adjustment to determine the net consideration to which it expects to be entitled. For all of its sales to non-consignment distribution channels, revenue is recognized when control of the product is transferred to the customer (i.e. when its performance obligation is satisfied), which typically occurs when 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. For product sales to its value-added resellers, non-stocking distributors and end-user customers, the Company grants return privileges to its customers, and because the Company has a long history with its customers, the Company is able to estimate the amount of product that will be returned. Sales incentives and other programs that the Company may make available to these customers are considered to be a form of variable consideration, and the Company maintains estimated accruals and allowances using the expected value method. The Company has entered into consignment arrangements, in which goods are left in the possession of another party to sell. As products are sold from the customer to third parties, the Company recognizes revenue based on a variable percentage of a fixed price. Revenue recognized varies depending on whether a patient is covered by insurance or is not covered by insurance. In addition, the Company may incur a revenue deduction related to the use of the Company’s rebate program. Sales to stocking distributors are made under terms with fixed pricing and limited rights of return (known as “stock rotation”) of the Company’s products held in their inventory. Revenue from sales to distributors is recognized upon the transfer of control to the distributor. The Company assessed the promised goods and services in the technical support to Invekra for a ten-year period as being a distinct service that Invekra can benefit from on its own and is separately identifiable from any other promises within the contract. Given that the distinct service is not substantially the same as other goods and services within the Invekra contract, the Company accounted for the distinct service as a performance obligation. Service revenue from testing contracts is recognized as tests are completed and a final report is sent to the customer. Disaggregation of Revenue The following table presents the Company’s disaggregated revenues by revenue source: Year Ended March 31, 2021 2020 Product Human Care $ 15,317,000 $ 15,686,000 Animal Care 3,200,000 2,091,000 18,517,000 17,777,000 Service 112,000 151,000 Total $ 18,629,000 $ 17,928,000 |
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, 2021 and 2020, no customers represented more than 10% of net accounts receivable balance, respectively. For the year ended March 31, 2021, one customer represented 32%, and one customer represented 15% of net revenues. For the year ended March 31, 2020, one customer represented 15%, and one customer represented 11% of net revenues. |
Accounts Receivable | Accounts Receivable Trade accounts receivable are recorded net of allowances for cash discounts for prompt payment, doubtful accounts, and sales returns. Estimates for cash discounts and sales returns are based on analysis of contractual terms and historical trends. The Company’s policy is to reserve for uncollectible accounts based on its best estimate of the amount of probable credit losses in its existing accounts receivable. The Company periodically reviews its accounts receivable to determine whether an allowance for doubtful accounts is necessary based on an analysis of past due accounts and other factors that may indicate that the realization of an account may be in doubt. Other factors that the Company considers include its existing contractual obligations, historical payment patterns of its customers and individual customer circumstances, an analysis of days sales outstanding by customer and geographic region, and a review of the local economic environment and its potential impact on government funding and reimbursement practices. Account balances deemed to be uncollectible are charged to the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts represents probable credit losses at March 31, 2021 and 2020 in the amounts of $125,000 and $1,028,000, respectively. Additionally, at March 31, 2021 and 2020, the Company has allowances of $1,488,000 and $1,230,000, 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 net realizable value. 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 a provision to reduce the carrying amounts of inventories to their net realizable value in the amounts of $223,000 and $600,000 at March 31, 2021 and 2020, respectively, which is included in cost of product revenues on the Company’s accompanying consolidated statements of comprehensive (loss) income. |
Financial Assets and Liabilities | Financial Assets and Liabilities Financial instruments, including cash and cash equivalents, accounts receivable and accounts payable 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) 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. As of March 31, 2021 and 2020, 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. During the years ended March 31, 2021 and 2020, the Company had noted no indicators of impairment. |
Research and Development | Research and Development Research and development expenses are charged to operations as incurred and consists primarily of personnel expenses, clinical and regulatory services and supplies. For the years ended March 31, 2021 and 2020, research and development expense amounted to $555,000 and $1,339,000, respectively. |
Advertising Costs | Advertising Costs Advertising costs are charged to operations as incurred. Advertising costs amounted to $41,000 and $35,000, for the years ended March 31, 2021 and 2020, respectively. Advertising costs are included in selling, general and administrative expenses in the accompanying consolidated statements of comprehensive (loss) income. |
Shipping and Handling Costs | Shipping and Handling Costs The Company classifies amounts billed to customers related to shipping and handling in sale transactions as product revenues. The corresponding shipping and handling costs incurred are recorded in cost of product revenues. For the years ended March 31, 2021 and 2020, the Company recorded revenue related to shipping and handling costs of $37,000 and $57,000, respectively. These amounts are included in product revenues in the accompanying consolidated statements of comprehensive (loss) income. |
Foreign Currency Reporting | Foreign Currency Reporting The Company’s subsidiary, OTM, uses the local currency (Mexican Pesos) as its functional currency and its subsidiary, SP 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 $1,031,000 and $(1,261,000) for the years ended March 31, 2021 and 2020, respectively. These amounts were recorded in other comprehensive loss in the accompanying consolidated statements of comprehensive loss for the years ended March 31, 2021 and 2020. Foreign currency transaction gains (losses) relate primarily to trade payables and receivables and intercompany transactions between subsidiaries OTM and SP Europe. These transactions are expected to be settled in the foreseeable future. The Company recorded foreign currency transaction losses of $690,000 for the year ended March 31, 2021, and foreign currency transaction gains of $306,000, for the year ended March 31, 2020. The related amounts were recorded in other expense in the accompanying consolidated statements of comprehensive (loss) income. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for share-based awards exchanged for employee services at the estimated grant date fair value of the award. The Company estimates the fair value of employee stock 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 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) income or cash flows. |
Comprehensive Loss | Comprehensive Loss Other comprehensive loss includes all changes in stockholders’ equity during a period from non-owner sources and is reported in the consolidated statement of changes in stockholders’ equity. To date, other comprehensive loss consists of changes in accumulated foreign currency translation adjustments. Accumulated other comprehensive losses at March 31, 2021 and 2020 were $4,579,000, and $5,610,000, 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. For the Year Ended March 31, (In thousands, except per share data) 2021 2020 Numerator: Loss from continuing operations $ (4,615 ) $ (3,573 ) Income from discontinued operations 665 265 Net loss $ (3,950 ) $ (3,308 ) Denominator: Weighted-average number of common shares outstanding: basic and diluted 1,996 1,477 Loss per share from continuing operations $ (2.31 ) $ (2.42 ) Income per share from discontinued operations 0.33 0.18 Net loss per share: basic and diluted $ (1.97 ) $ (2.24 ) The computation of basic loss per share for the years ended March 31, 2021 and 2020 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. March 31, (In thousands) 2021 2020 Common stock to be issued upon vesting of restricted stock units 1 2 Common stock to be issued upon exercise of options 268 378 Common stock to be issued upon exercise of warrants 119 320 Common stock to be issued upon conversion of Series C – 17 Common stock to be issued upon exercise of common stock units (1) 46 46 434 763 (1) Consists of 30,668 restricted stock units and warrants to purchase 15,332 shares of common stock |
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. The company currently does not have any active derivative financial instruments. |
Preferred Stock | Preferred Stock The Company applies the accounting standards for distinguishing liabilities from equity when determining the classification and measurement of its preferred stock. Shares that are subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. The Company classifies conditionally redeemable preferred shares, which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control, as temporary equity. At all other times, preferred shares are classified as stockholders' equity. |
Subsequent Events | Subsequent Events Management has evaluated subsequent events or transactions occurring through the date these consolidated financial statements were issued. |
Adoption of Recent Accounting Standards | Adoption of Recent Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) Leases (Topic 840) Amendments to SEC Paragraphs Pursuant to the Staff Announcement at the July 20, 2017 EITF Meeting and Rescission of Prior SEC Staff Announcements and Observer Comments In February 2018, the FASB issued ASU No. 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income |
Recent Accounting Standards | Recent Accounting Standards The Company has evaluated all the recent accounting standards and determined that none of them are material to it. |
3. Summary of Significant Acc_3
3. Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Accounting Policies [Abstract] | |
Prior period adjustments | The effects of the revision to the balance sheet as of March 31, 2020 are as follows (in thousands): As Previously Reported Adjustment As Revised SG&A expense – 362 362 Net loss (2,946 ) 362 (3,308 ) Withholding tax payable – (3,082 ) 3,082 Retained earnings (172,244 ) 3,082 (175,326 ) |
Disaggregated Revenue by Source | The following table presents the Company’s disaggregated revenues by revenue source: Year Ended March 31, 2021 2020 Product Human Care $ 15,317,000 $ 15,686,000 Animal Care 3,200,000 2,091,000 18,517,000 17,777,000 Service 112,000 151,000 Total $ 18,629,000 $ 17,928,000 |
Property and equipment estimated useful life | Estimated useful asset life by classification is as follows: Years Office equipment 3 Manufacturing, lab and other equipment 5 Furniture and fixtures 7 |
Computation of earnings per share | For the Year Ended March 31, (In thousands, except per share data) 2021 2020 Numerator: Loss from continuing operations $ (4,615 ) $ (3,573 ) Income from discontinued operations 665 265 Net loss $ (3,950 ) $ (3,308 ) Denominator: Weighted-average number of common shares outstanding: basic and diluted 1,996 1,477 Loss per share from continuing operations $ (2.31 ) $ (2.42 ) Income per share from discontinued operations 0.33 0.18 Net loss per share: basic and diluted $ (1.97 ) $ (2.24 ) |
Schedule of antidilutive shares | The computation of basic loss per share for the years ended March 31, 2021 and 2020 excludes the potentially dilutive securities summarized in the table below because their inclusion would be anti-dilutive. March 31, (In thousands) 2021 2020 Common stock to be issued upon vesting of restricted stock units 1 2 Common stock to be issued upon exercise of options 268 378 Common stock to be issued upon exercise of warrants 119 320 Common stock to be issued upon conversion of Series C – 17 Common stock to be issued upon exercise of common stock units (1) 46 46 434 763 (1) Consists of 30,668 restricted stock units and warrants to purchase 15,332 shares of common stock |
4. Sale of Assets - Discontin_2
4. Sale of Assets - Discontinued Operations (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Components of sale | The proceeds from the sale were allocated to the components of the sale utilizing the residual approach as follows: Total proceeds $ 1,100,000 Less - Production equipment (150,000 ) Residual attributable to the intellectual property and territory rights $ 950,000 |
Schedule of allocation of sale price | Proceeds were allocated to the components of the sale based upon their relative selling prices are as follows: Customer base $ 850,000 Less: Funds remaining in escrow (60,000 ) Less: Services due from buyer (100,000 ) Less: Working capital adjustment (80,000 ) Total proceeds $ 610,000 |
Assets and liabilities of disposal group | The carrying value of the assets and liabilities of discontinued operations on the consolidated balance sheets as of March 31, 2021 and March 31, 2020 were as follows: March 31, 2021 March 31, 2020 Assets Non-current assets held for sale $ – $ 704,000 Liabilities Liabilities associated with assets currently held for sale $ – $ 646,000 The operations of the Micromed business included in discontinued operations is summarized as follows: Year ended March 31, 2021 2020 Revenues $ 214,000 $ 1,008,000 Cost of revenues 53,000 521,000 Selling general and administrative expenses 38,000 130,000 Income from discontinued operations before tax 123,000 357,000 Gain on disposal of discontinued operations before income taxes 770,000 – Total income from discontinued operations, before tax 893,000 357,000 Income Tax benefit (expense) (228,000 ) (92,000 ) Income from discontinued operations, net of tax $ 665,000 $ 265,000 |
5. Accounts Receivable (Tables)
5. Accounts Receivable (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Receivables [Abstract] | |
Accounts receivable | Accounts receivable, net consists of the following: March 31, 2021 2020 Accounts receivable $ 4,419,000 $ 6,231,000 Less: allowance for doubtful accounts (125,000 ) (1,028,000 ) Less: discounts, rebates, distributor fees and returns (1,488,000 ) (1,230,000 ) $ 2,806,000 $ 3,973,000 |
6. Inventories (Tables)
6. Inventories (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | Inventories consist of the following: March 31, 2021 2020 Raw materials $ 1,670,000 $ 1,128,000 Finished goods 860,000 1,053,000 $ 2,530,000 $ 2,181,000 |
7. Prepaid Expenses and Other_2
7. Prepaid Expenses and Other Current Assets (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
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, 2021 2020 Prepaid insurance $ 705,000 $ 523,000 Prepaid rebates – – Tax prepaid to Mexican tax authorities 1,850,000 1,305,000 Other prepaid expenses and other current assets 663,000 428,000 $ 3,218,000 $ 2,256,000 |
8. Property and Equipment (Tabl
8. Property and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Property, Plant and Equipment [Abstract] | |
Schedule of property and equipment | Property and equipment consists of the following: March 31, 2021 2020 Manufacturing, lab, and other equipment $ 1,170,000 $ 3,008,000 Office equipment 109,000 376,000 Furniture and fixtures 66,000 102,000 Leasehold improvements 486,000 481,000 1,831,000 3,967,000 Less: accumulated depreciation and amortization (1,471,000 ) (3,602,000 ) $ 360,000 $ 365,000 |
9. Accrued Expenses and Other_2
9. Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Payables and Accruals [Abstract] | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consist of the following: March 31, 2021 2020 Salaries and related costs $ 787,000 $ 1,078,000 Professional fees – 234,000 Other 367,000 462,000 $ 1,154,000 $ 1,774,000 |
12. Leases (Tables)
12. Leases (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Leases [Abstract] | |
Lease cost information | Finance leases are comprised primarily of vehicle leases. Balance sheet information related to our leases is presented below: March 31, March 31, 2021 2020 Operating leases: Operating lease right-of-use assets $ 769,000 $ 671,000 Operating lease liabilities – current 240,000 200,000 Operating lease liabilities – non-current 529,000 471,000 Finance leases: Property, plant and equipment – – Current portion of financing leases – – Other information related to leases is presented below: Year ended March 31, 2021 Lease cost Operating lease cost $ 435,000 As of March 31, 2021 Other information: Operating cash flows from operating leases $ (215,000 ) Weighted-average remaining lease term – operating leases (in months) 37.7 Weighted-average discount rate – operating leases 6.00% |
Schedule of minimum operating lease liabilities | As of March 31, 2021, the annual minimum lease payments of our operating lease liabilities were as follows: For Years Ending March 31, 2022 $ 296,000 2023 261,000 2024 194,000 2025 110,000 Thereafter 6,000 Total future minimum lease payments, undiscounted 867,000 Less: imputed interest (98,000 ) Present value of future minimum lease payments $ 769,000 |
15. Stock-Based Compensation (T
15. Stock-Based Compensation (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award, Additional General Disclosures [Abstract] | |
Weighted-average assumptions of fair value of employee stock options | The fair value of employee stock options was estimated using the following weighted-average assumptions: Year Ended March 31, 2021 2020 Fair value of the Company’s common stock on date of grant $ 8.03 $ 4.36 Expected term 6.00 yrs 5.30 yrs Risk-free interest rate 0.5800% 1.6993% Dividend yield 0.00% 0.00% Volatility 80.7% 122.4% Fair value of options granted $ 5.48 $ 3.69 |
Employee stock-based compensation expense | Share-based awards compensation expense is as follows: Year Ended March 31, 2021 2020 Cost of revenues $ (27,000 ) $ 94,000 Research and development 26,000 102,000 Selling, general and administrative 372,000 643,000 Total stock-based compensation $ 371,000 $ 839,000 |
Schedule of stock-based awards outstanding by plan | Stock-based awards outstanding at March 31, 2021 under the various plans are as follows: Unvested Plan Stock Options Restricted Stock Total 2006 Plan 4,431 – 4,431 2011 Plan 155,226 – 155,226 2016 Plan 107,912 833 108,745 267,569 833 268,402 Stock-based awards available for grant as of March 31, 2021 438,616 |
Schedule of option activity | Stock options award activity is as follows: Number of Weighted- Weighted- Aggregate Outstanding at April 1, 2020 378,000 $ 26.55 Options granted 228,331 8.03 Options exercised (93,301 ) 5.48 Options forfeited (218,976 ) 7.03 Options expired (26,485 ) 116.51 Outstanding at March 31, 2021 267,569 $ 25.16 8.12 $ 646,878 Exercisable at March 31, 2021 144,238 $ 39.81 6.70 $ 265,927 |
Schedule of unvested restricted stock activity | 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, 2020 1,666 $ 13.68 Restricted stock awards granted 5,695 4.79 Restricted stock awards vested (6,528 ) 5.93 Unvested restricted stock awards outstanding at March 31, 2021 833 $ 13.68 |
16. Income Taxes (Tables)
16. Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Income Tax Disclosure [Abstract] | |
Schedule of deferred tax assets | The Company has the following net deferred tax assets: March 31, 2021 2020 Deferred tax assets: Net operating loss carryforwards $ 25,687,000 $ 27,948,000 Research and development tax credit carryforwards 1,850,000 1,850,000 Stock-based compensation 3,120,000 3,803,000 Allowances and accruals 659,000 1,099,000 Other deferred tax assets 398,000 731,000 State income taxes – 1,000 Basis difference in assets – 6,000 Lease liability 78,000 226,000 Gross deferred tax assets $ 31,792,000 $ 35,664,000 Less valuation allowance (31,528,000 ) (35,297,000 ) Total deferred tax assets $ 264,000 $ 367,000 Deferred tax liabilities: Fixed assets (3,000 ) (5,000 ) Prepaid expenses (186,000 ) (143,000 ) Right of Use asset (75,000 ) (219,000 ) Gross deferred tax liabilities (264,000 ) (367,000 ) Net deferred tax assets $ – $ – |
Income tax provision domestic and foreign | The income tax provision (benefit) is based on the following loss before income taxes, which are from domestic sources and foreign loss before income taxes: Year Ended March 31, 2021 2020 Domestic $ 2,052,000 $ 1,425,000 Foreign 1,467,000 227,000 $ 3,519,000 $ 1,652,000 |
Schedule of income tax expense | The Company’s income tax expense/(benefits) consist of the following: Year Ended March 31, 2021 2020 Current: State $ 1,000 $ 3,000 Foreign 941,000 118,000 942,000 121,000 Deferred: Federal – – State – – Foreign – – $ 942,000 $ 121,000 |
Reconciliation of federal income tax rate to effective rate | A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for continuing operations is as follows: Year Ended March 31, 2021 2020 Expected federal statutory rate 21.0% 21.0% State income taxes 2.1% 11.0% Foreign earnings taxed at different rates 3.6% 0.6% Foreign tax true-up (12.4% ) Effect of state net operating loss expiration (0.0% ) (0.1% ) Effect of permanent differences (9.5% ) (14.0% ) Effect of intercompany interest permanent differences (17.9% ) 5.6% True-up of state deferred assets (120.7% ) (19.9% ) GILTI income (0.0% ) (1.4% ) (133.8% ) 2.8% Change in valuation allowance 107.1% (10.1% ) Totals (26.7% ) (7.3% ) |
18. Geographic Information (Tab
18. Geographic Information (Tables) | 12 Months Ended |
Mar. 31, 2021 | |
Segments, Geographical Areas [Abstract] | |
Schedule of geographic sales | The following table shows the Company’s product revenues by geographic region: Year Ended March 31, 2021 2020 United States $ 5,419,000 $ 7,991,000 Latin America 5,864,000 3,622,000 Europe and Rest of the World 7,234,000 6,164,000 Total $ 18,517,000 $ 17,777,000 |
2. Liquidity and Financial Co_2
2. Liquidity and Financial Condition (Details Narrative) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Liquidity And Financial Condition | ||
Accumulated deficit | $ (179,277,000) | $ (175,327,000) |
Working capital | $ 8,906,000 | $ 7,554,000 |
3. Summary of Significant Acc_4
3. Summary of Significant Accounting Policies (Details - Effects of revision to balance sheet) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
SG&A expense | $ 362 | |
Net loss | $ (3,950) | (3,308) |
Withholding tax payable | 3,478 | 3,082 |
Retained earnings | $ (179,277) | (175,327) |
Previously Reported [Member] | ||
SG&A expense | 0 | |
Net loss | (2,946) | |
Withholding tax payable | 0 | |
Retained earnings | (172,244) | |
Adjustment [Member] | ||
SG&A expense | 362 | |
Net loss | 362 | |
Withholding tax payable | (3,082) | |
Retained earnings | $ 3,082 |
3. Summary of Significant Acc_5
3. Summary of Significant Accounting Policies (Details - Disaggregation of revenue) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | $ 18,629,000 | $ 17,928,000 |
Product [Member] | ||
Revenues | 18,517,000 | 17,777,000 |
Product [Member] | Human Care [Member] | ||
Revenues | 15,317,000 | 15,686,000 |
Product [Member] | Animal Care [Member] | ||
Revenues | 3,200,000 | 2,091,000 |
Service [Member] | ||
Revenues | $ 112,000 | $ 151,000 |
3. Summary of Significant Acc_6
3. Summary of Significant Accounting Policies (Details-Useful lives) | 12 Months Ended |
Mar. 31, 2021 | |
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 Acc_7
3. Summary of Significant Accounting Policies (Details - Earnings per share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Numerator: | ||
Loss from continuing operations | $ (4,615) | $ (3,573) |
Income from discontinued operations | 665 | 265 |
Net loss | $ (3,950) | $ (3,308) |
Denominator: | ||
Weighted-average number of common shares outstanding: basic and diluted | 1,996 | 1,477 |
Loss per share from continuing operations | $ (2.31) | $ (2.42) |
Income per share from discontinued operations | 0.33 | 0.18 |
Net loss per share: basic and diluted | $ (1.97) | $ (2.24) |
3. Summary of Significant Acc_8
3. Summary of Significant Accounting Policies (Details - Antidilutive shares) - shares shares in Thousands | 12 Months Ended | ||
Mar. 31, 2021 | Mar. 31, 2020 | ||
Antidilutive shares | 434 | 763 | |
Restricted Stock Units R S U [Member] | |||
Antidilutive shares | 1 | 2 | |
Stock Options [Member] | |||
Antidilutive shares | 268 | 378 | |
Warrants [Member] | |||
Antidilutive shares | 119 | 320 | |
Series C Preferred Stock [Member] | |||
Antidilutive shares | 0 | 17 | |
Common Stock Units [Member] | |||
Antidilutive shares | [1] | 46 | 46 |
[1] | Consists of 30,668 restricted stock units and warrants to purchase 15,332 shares of common stock |
3. Summary of Significant Acc_9
3. Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Allowance for doubtful accounts | $ 125,000 | $ 1,028,000 |
Allowance for sales discounts, rebates, distributor fees and returns | 1,488,000 | 1,230,000 |
Inventory reserves | 223,000 | 600,000 |
Transfers in or out of Level 3 | 0 | 0 |
Asset impairment charges | 0 | 0 |
Research and development expenses | 555,000 | 1,339,000 |
Advertising costs | 41,000 | 35,000 |
Revenues | 18,629,000 | 17,928,000 |
Foreign currency translation adjustment | 1,031,000 | (1,261,000) |
Foreign currency transaction loss | (690,000) | |
Foreign currency transaction gain | 306,000 | |
Accumulated other comprehensive loss | (4,579,000) | (5,610,000) |
Shipping and Handling [Member] | ||
Revenues | $ 37,000 | $ 57,000 |
Revenues [Member] | First Customer [Member] | Customer Concentration Risk [Member] | ||
Significant customer concentration | 32.00% | 15.00% |
Revenues [Member] | Second Customer [Member] | Customer Concentration Risk [Member] | ||
Significant customer concentration | 15.00% | 11.00% |
4. Sale of Assets - Discontin_3
4. Sale of Assets - Discontinued Operations (Details - Components of sale) - USD ($) | 11 Months Ended | 12 Months Ended | |
Feb. 21, 2020 | Mar. 31, 2021 | Mar. 31, 2020 | |
Residual attributable to the intellectual property and territory rights | $ 137,000 | $ 3,572,000 | |
Microsafe Group | |||
Total proceeds | $ 1,100,000 | ||
Less: production equipment | (150,000) | ||
Residual attributable to the intellectual property and territory rights | $ 950,000 |
4. Sale of Assets - Discontin_4
4. Sale of Assets - Discontinued Operations (Details - Allocation of sale price) - Micromed Laboratories [Member] | 3 Months Ended |
Jun. 24, 2020USD ($) | |
Customer base | $ 850,000 |
Less: Funds remaining in escrow | (60,000) |
Less: Services due from buyer | (100,000) |
Less: Working capital adjustment | (80,000) |
Proceeds from sale of business | $ 610,000 |
4. Sale of Assets - Discontin_5
4. Sale of Assets - Discontinued Operations (Details - Assets and Liabilities) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Assets | ||
Non-current assets held for sale | $ 0 | $ 704,000 |
Liabilities | ||
Liabilities associated with assets currently held for sale | 0 | 646,000 |
Micromed Laboratories [Member] | ||
Assets | ||
Non-current assets held for sale | 0 | 704,000 |
Liabilities | ||
Liabilities associated with assets currently held for sale | $ 0 | $ 646,000 |
4. Sale of Assets - Discontin_6
4. Sale of Assets - Discontinued Operations (Details - Discontinued Operations) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income from discontinued operations, net of tax | $ 665,000 | $ 265,000 |
Micromed Laboratories [Member] | ||
Revenues | 214,000 | 1,008,000 |
Cost of Revenues | 53,000 | 521,000 |
Selling, general and administrative expenses | 38,000 | 130,000 |
Income from discontinued operations before tax | 123,000 | 357,000 |
Gain on disposal of discontinued operations before income taxes | 770,000 | 0 |
Total income from discontinued operations, before tax | 893,000 | 357,000 |
Income Tax benefit (expense) | (228,000) | (92,000) |
Income from discontinued operations, net of tax | $ 665,000 | $ 265,000 |
5. Accounts Receivable (Details
5. Accounts Receivable (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Receivables [Abstract] | ||
Accounts receivable | $ 4,419,000 | $ 6,231,000 |
Less: allowance for doubtful accounts | (125,000) | (1,028,000) |
Less: discounts, rebates, distributor fees and returns | (1,488,000) | (1,230,000) |
Accounts receivable, net | $ 2,806,000 | $ 3,973,000 |
6. Inventories (Details)
6. Inventories (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Raw Materials | $ 1,670,000 | $ 1,128,000 |
Finished goods | 860,000 | 1,053,000 |
Inventories, net | $ 2,530,000 | $ 2,181,000 |
7. Prepaid Expenses and Other_3
7. Prepaid Expenses and Other Current Assets (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid insurance | $ 705,000 | $ 523,000 |
Prepaid rebates | 0 | 0 |
Tax prepaid to Mexican tax authorities | 1,850,000 | 1,305,000 |
Other prepaid expenses and other current assets | 663,000 | 428,000 |
Total prepaid expenses and other current assets | $ 3,218,000 | $ 2,256,000 |
8. Property and Equipment (Deta
8. Property and Equipment (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Property, Plant and Equipment [Abstract] | ||
Manufacturing, lab, and other equipment | $ 1,170,000 | $ 3,008,000 |
Office equipment | 109,000 | 376,000 |
Furniture and fixtures | 66,000 | 102,000 |
Leasehold improvements | 486,000 | 481,000 |
Property and equipment, gross | 1,831,000 | 3,967,000 |
Less: accumulated depreciation and amortization | (1,471,000) | (3,602,000) |
Property and equipment, net | $ 360,000 | $ 365,000 |
8. Property and Equipment (De_2
8. Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization | $ 227,000 | $ 312,000 |
Loss on disposal of equipment | $ 0 | $ (18,000) |
9. Accrued Expenses and Other_3
9. Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Payables and Accruals [Abstract] | ||
Salaries and related costs | $ 787,000 | $ 1,078,000 |
Professional fees | 0 | 234,000 |
Other | 367,000 | 462,000 |
Accrued expenses and other current liabilities | $ 1,154,000 | $ 1,774,000 |
10. Common Stock Liability (Det
10. Common Stock Liability (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Oct. 04, 2018 | Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 | |
Net proceeds from sale of stock | $ 0 | $ 1,376,000 | ||
Common stock liability | $ 270,000 | |||
At Market Issuance Sales Agr [Member] | ||||
Stock issued new, shares | 12,556 | |||
Stock sale price | $ 21.51 | |||
Gross proceeds from sale of stock | $ 270,000 | |||
Net proceeds from sale of stock | 262,000 | |||
Common stock liability | $ 270,000 |
11. Long-Term Debt (Details Nar
11. Long-Term Debt (Details Narrative) | 12 Months Ended |
Mar. 31, 2021USD ($) | |
Insurance Premiums Note 1 [Member] | |
Debt issuance date | Feb. 1, 2021 |
Debt face amount | $ 584,000 |
Debt interest rate | 4.98% |
Debt maturity date | Oct. 1, 2021 |
Principal payments made | $ 199,000 |
Insurance Premiums Note 2 [Member] | |
Debt issuance date | Feb. 1, 2020 |
Debt face amount | $ 534,000 |
Debt interest rate | 5.48% |
Debt maturity date | Dec. 1, 2019 |
Principal payments made | $ 53,000 |
Interest payments made | $ 2,000 |
Payment frequency | monthly |
Periodic payment amount | $ 53,000 |
Paycheck Protection Program [Member] | States Bank in Atlanta [Member] | |
Debt interest rate | 1.00% |
Debt maturity date | Apr. 29, 2022 |
Proceeds from loan | $ 1,310,000 |
12. Leases (Details - Balance s
12. Leases (Details - Balance sheet information related to leases) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Operating leases: | ||
Operating lease right-of-use assets | $ 769,000 | $ 359,000 |
Operating lease liabilities - current | 240,000 | 134,000 |
Operating lease liabilities - non-current | 529,000 | 235,000 |
Finance leases: | ||
Property, plant and equipment | 0 | 0 |
Current portion of capital leases | $ 0 | $ 0 |
12. Leases (Details - Other inf
12. Leases (Details - Other information related to leases) | 12 Months Ended |
Mar. 31, 2021USD ($) | |
Lease cost | |
Operating lease cost | $ 435,000 |
Operating cash flows from operating leases | $ (215,000) |
Weighted-average remaining lease term - operating leases (in months) | 37 months 22 days |
Weighted-average discount rate - operating leases | 6.00% |
12. Leases (Details - Minimum o
12. Leases (Details - Minimum operating lease liabilities) | Mar. 31, 2021USD ($) |
Leases [Abstract] | |
2021 | $ 296,000 |
2022 | 261,000 |
2023 | 194,000 |
2024 | 110,000 |
Thereafter | 6,000 |
Total future minimum lease payments, undiscounted | 867,000 |
Less imputed interest | (98,000) |
Present value of future minimum lease payments | $ 769,000 |
13. Commitments and Contingenic
13. Commitments and Contingenices (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Annual salaries | $ 550,000 | |
Potential severance | 550,000 | |
Trombly Business Law [Member] | ||
Legal fees | $ 215,000 | $ 255,000 |
14. Stockholders' Equity (Detai
14. Stockholders' Equity (Details Narrative) - $ / shares | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Common stock par value | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 24,000,000 | 24,000,000 |
Convertible Preferred Stock [Member] | ||
Preferred stock, shares authorized | 714,286 | 714,286 |
Preferred stock par value | $ 0.0001 | $ 0.0001 |
Series C Preferred Stock [Member] | ||
Preferred stock converted | 2 | |
Common stock issued upon conversion | 17,222 |
15. Stock-Based Compensation (D
15. Stock-Based Compensation (Details-Assumptions) - $ / shares | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Weighted average assumptions for calculating fair value of stock options | ||
Fair value of common stock on date of grant | $ 8.03 | $ 4.36 |
Expected term | 6 years | 5 years 3 months 19 days |
Risk-free interest rate | 0.58% | 1.6993% |
Dividend yield | 0.00% | 0.00% |
Volatility | 80.70% | 122.40% |
Fair value of options granted, per share | $ 5.48 | $ 3.69 |
15. Stock-Based Compensation _2
15. Stock-Based Compensation (Details-Stock-based compensation) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Total stock-based compensation | $ 371,000 | $ 839,000 |
Cost of revenues [Member] | ||
Total stock-based compensation | (27,000) | 94,000 |
Research and development [Member] | ||
Total stock-based compensation | 26,000 | 102,000 |
Selling, general and administrative [Member] | ||
Total stock-based compensation | $ 372,000 | $ 643,000 |
15. Stock-Based Compensation _3
15. Stock-Based Compensation (Details-Plans) | Mar. 31, 2021shares |
Options outstanding | 267,569 |
Restricted stock units outstanding | 833 |
Total options and restricted stock units outstanding | 268,402 |
Stock-based awards available for grant | 438,616 |
2006 Plan [Member] | |
Options outstanding | 4,431 |
Restricted stock units outstanding | 0 |
Total options and restricted stock units outstanding | 4,431 |
Stock-based awards available for grant | 0 |
2011 Plan [Member] | |
Options outstanding | 155,226 |
Restricted stock units outstanding | 0 |
Total options and restricted stock units outstanding | 155,226 |
Stock-based awards available for grant | 351,139 |
2016 Plan [Member] | |
Options outstanding | 107,912 |
Restricted stock units outstanding | 833 |
Total options and restricted stock units outstanding | 108,745 |
Stock-based awards available for grant | 87,477 |
15. Stock-Based Compensation _4
15. Stock-Based Compensation (Details-Option activity) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Options | ||
Outstanding at end of period | 267,569 | |
Weighted Average Exercise Price | ||
Granted | $ 8.03 | $ 4.36 |
Stock Options [Member] | ||
Options | ||
Outstanding at beginning of period | 378,000 | |
Granted | 228,331 | |
Exercised | (93,301) | |
Forfeited | (218,976) | |
Expired | (26,485) | |
Outstanding at end of period | 267,569 | 378,000 |
Exercisable at end of period | 144,238 | |
Weighted Average Exercise Price | ||
Outstanding at beginning of period | $ 26.55 | |
Granted | 8.03 | |
Exercised | 5.48 | |
Forfeited | 7.03 | |
Expired | 116.51 | |
Outstanding at end of period | 25.16 | $ 26.55 |
Exercisable at end of period | $ 39.81 | |
Weighted Average Contractual Term | ||
Outstanding at end of period | 8 years 1 month 13 days | |
Exercisable at end of period | 6 years 8 months 12 days | |
Aggregate Intrinsic Value | ||
Outstanding at end of period | $ 646,878 | |
Exercisable at end of period | $ 265,927 |
15. Stock-Based Compensation _5
15. Stock-Based Compensation (Details-Restricted stock activity) - Restricted Stock [Member] | 12 Months Ended |
Mar. 31, 2021$ / sharesshares | |
Restricted stock award activity | |
Unvested restricted stock awards, beginning balance | shares | 1,666 |
Restricted stock awards granted | shares | 5,695 |
Restricted stock awards vested | shares | (6,528) |
Unvested restricted stock awards, ending balance | shares | 833 |
Weighted average award date fair value per share, outstanding beginning balance | $ / shares | $ 13.68 |
Weighted average award date fair value per share, granted | $ / shares | 4.79 |
Weighted average award date fair value per share, vested | $ / shares | 5.93 |
Weighted average award date fair value per share, outstanding ending balance | $ / shares | $ 13.68 |
15. Stock-Based Compensation _6
15. Stock-Based Compensation (Details Narrative) - USD ($) | 12 Months Ended | ||||
Mar. 31, 2021 | Mar. 31, 2020 | Mar. 31, 2019 | Sep. 02, 2016 | Sep. 12, 2011 | |
Shares available for future issuance | 438,616 | ||||
Tax benefit | $ 403,000 | ||||
Decrease in stock based compensation deferred tax asset | $ (2,368,000) | ||||
Stock Options [Member] | |||||
Aggregate intrinsic value per share | $ 7.43 | ||||
Unrecognized compensation costs | $ 624,000 | ||||
Weighted average amortization period | 2 years 9 months 7 days | ||||
Restricted Stock [Member] | |||||
Unrecognized compensation costs | $ 5,000 | ||||
Weighted average amortization period | 5 months 20 days | ||||
2006 Plan [Member] | |||||
Shares available for future issuance | 0 | ||||
2011 Plan [Member] | |||||
Increase in shares authorized for issuance | 197,450 | 102,863 | |||
Shares initially authorized for issuance | 9,508 | ||||
Shares available for future issuance | 351,139 | ||||
2016 Plan [Member] | |||||
Increase in shares authorized for issuance | 105,306 | 4,860 | |||
Shares initially authorized for issuance | 44,445 | ||||
Shares available for future issuance | 87,477 |
16. Income Taxes (Details-Defer
16. Income Taxes (Details-Deferred taxes) - USD ($) | Mar. 31, 2021 | Mar. 31, 2020 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 25,687,000 | $ 27,948,000 |
Research and development tax credit carryforwards | 1,850,000 | 1,850,000 |
Stock-based compensation | 3,120,000 | 3,803,000 |
Allowances and accruals | 659,000 | 1,099,000 |
Other deferred tax assets | 398,000 | 731,000 |
State income taxes | 0 | 1,000 |
Basis difference in assets | 0 | 6,000 |
Lease liability | 78,000 | 226,000 |
Gross deferred tax assets | 31,792,000 | 35,664,000 |
Less valuation allowance | (31,528,000) | (35,297,000) |
Total deferred tax assets | 264,000 | 367,000 |
Deferred tax liabilities: | ||
Fixed assets | (3,000) | (5,000) |
Prepaid expenses | (186,000) | (143,000) |
Right of Use asset | (75,000) | (219,000) |
Gross deferred tax liabilities | (264,000) | (367,000) |
Net deferred tax assets | $ 0 | $ 0 |
16. Income Taxes (Details-Incom
16. Income Taxes (Details-Income source) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income before income taxes | $ 3,902,000 | $ 3,544,000 |
Federal [Member] | ||
Income before income taxes | 2,052,000 | 1,425,000 |
Foreign [Member] | ||
Income before income taxes | $ 1,467,000 | $ 227,000 |
16. Income Taxes (Details-Inc_2
16. Income Taxes (Details-Income tax expense) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Current: | ||
Current State income tax expense | $ 1,000 | $ 3,000 |
Current Foreign Tax Expense | 941,000 | 118,000 |
Current Income Tax Expense | 942,000 | 121,000 |
Deferred: | ||
Federal deferred income tax | 0 | 0 |
State deferred income tax | 0 | 0 |
Foreign deferred income tax | 0 | 0 |
Total deferred income tax | $ 942,000 | $ 121,000 |
16. Income Taxes (Details-Recon
16. Income Taxes (Details-Reconciliation of tax rate) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Income Tax Disclosure [Abstract] | ||
Expected federal statutory rate | 21.00% | 21.00% |
State income taxes | 2.10% | 11.00% |
Foreign earnings taxed at different rates | 3.60% | 0.60% |
Foreign tax true-up | (12.40%) | |
Effect of state operating loss expiration | (0.00%) | (0.10%) |
Effect of permanent differences | (9.50%) | (14.00%) |
Effect of intercompany interest permanent differences | (17.90%) | 5.60% |
True-ups of state deferred assets | (120.70%) | (19.90%) |
GILTI income | (0.00%) | (1.40%) |
Total effective rate | (133.80%) | 2.80% |
Change in valuation allowance | 107.10% | (10.10%) |
Totals | (26.70%) | (7.30%) |
16. Income Taxes (Details Narra
16. Income Taxes (Details Narrative) | 12 Months Ended |
Mar. 31, 2021USD ($) | |
Foreign tax credit carryforward | $ 50,000 |
Federal [Member] | |
Net operating loss carryforwards | $ 105,100,000 |
Operating loss beginning expiration dates | Dec. 31, 2024 |
Research credit carryforwards | $ 1,000,000 |
Research credit expiration date | Dec. 31, 2024 |
California [Member] | |
Net operating loss carryforwards | $ 38,100,000 |
Operating loss beginning expiration dates | Dec. 31, 2029 |
Research credit carryforwards | $ 790,000 |
Foreign [Member] | |
Net operating loss carryforwards | $ 1,100,000 |
Operating loss beginning expiration dates | Mar. 31, 2028 |
Foreign tax credit carryforward | $ 50,000 |
Foreign tax credit expiration date | Mar. 31, 2023 |
17. Employee Benefit Plan (Deta
17. Employee Benefit Plan (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Retirement Benefits [Abstract] | ||
Company contributions to 401(k) plan | $ 89,000 | $ 155,000 |
18. Geographic Information (Det
18. Geographic Information (Details - Geographic regions) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | $ 18,629,000 | $ 17,928,000 |
Product [Member] | ||
Revenues | 18,517,000 | 17,777,000 |
Product [Member] | Sales Revenue, Segment [Member] | United States [Member] | ||
Revenues | 5,419,000 | 7,991,000 |
Product [Member] | Sales Revenue, Segment [Member] | Latin America [Member] | ||
Revenues | 5,864,000 | 3,622,000 |
Product [Member] | Sales Revenue, Segment [Member] | Europe and Other [Member] | ||
Revenues | $ 7,234,000 | $ 6,164,000 |
18. Geographic Information (D_2
18. Geographic Information (Details Narrative) - USD ($) | 12 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Service [Member] | ||
Revenues | $ 112,000 | $ 151,000 |