Sonoma Pharmaceuticals, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

5. Derivative Liabilities (Tables)

5. Derivative Liabilities (Tables)

9 Months Ended

Dec. 31, 2012

Derivative liability related to warrants without fixed settlement provisions

	December 31, 2012			March 31, 2012
Expected life		0.11 years			0.87 years
Risk-free interest rate		0.18	%		0.18	%
Dividend yield		0.00	%		0.00	%
Volatility		89	%		89	%
Warrants outstanding		924,470			762,876
Fair value of warrants	$	–		$	55,000

Derivative liability related to warrants with net-cash settlement provisions

	Modification Incremental Fair Value October 30, 2012			Pre-modification October 30, 2012			April 22, 2012
Expected life		4.00 years			2.00 years			2.50 years
Risk-free interest rate		0.74	%		0.30	%		0.40	%
Dividend yield		0.00	%		0.00	%		0.00	%
Volatility		89	%		100	%		100	%
Warrants outstanding		3,471,112			3,471,112			3,471,112
Fair value of warrants	$	1,636,000		$	1,254,000		$	2,347,000

Summary of the changes in the fair value of Level 3 financial liabilities

	Three Months Ended December 31,
	2012			2011
Beginning balance	$	(1,552	)	$	(120	)
Mark to market net unrealized (loss) gain		298			86
Incremental fair value adjustment due to modification		(382	)		–
Reclassification to additional paid in capital		1,636			–
Ending balance	$	–		$	(34	)

	Nine Months Ended December 31,
	2012			2011
Beginning balance	$	(55	)	$	(337	)
Fair value of warrants issued		(2,347	)		–
Mark to market net unrealized (loss) gain		1,148			303
Incremental fair value adjustment due to modification		(382	)		–
Reclassification to additional paid in capital		1,636			–
Ending balance	$	–		$	(34	)

- Definition

Tabular disclosure of liabilities, including [financial] instruments measured at fair value that are classified in stockholders' equity, if any, by class that are measured at fair value on a recurring and/or nonrecurring basis. The disclosures contemplated herein include the fair value measurements at the reporting date by the level within the fair value hierarchy in which the fair value measurements in their entirety fall, segregating fair value measurements using quoted prices in active markets for identical assets (Level 1), significant other observable inputs (Level 2), and significant unobservable inputs (Level 3). Where the quoted price in an active market for the identical liability is not available, the Level 1 input is the quoted price of an identical liability when traded as an asset.

+ References + Details