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

Quarterly report pursuant to Section 13 or 15(d)

4. Restatement of Condensed Consolidated Financial Statements (Tables)

4. Restatement of Condensed Consolidated Financial Statements (Tables)

3 Months Ended

Jun. 30, 2020

Accounting Changes and Error Corrections [Abstract]

	June 30, 2020
	As Originally Reported			Adjustments			As Restated
	(in thousands)			(in thousands)			(in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	4,551		$	–		$	4,551
Accounts receivable, net		5,220			(446	)		4,774
Inventories, net		4,193			–			4,193
Prepaid expenses and other current assets		2,937			(123	)		2,814
Current portion of deferred consideration, net of discount		188			–			188
Total current assets		17,089			(569	)		16,520
Operating lease right-of-use assets		343			–			343
Property and equipment, net		372			–			372
Deferred consideration, net of discount, less current portion		779			–			779
Other assets		69			–			69
Total assets	$	18,652		$	(569	)	$	18,083

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	4,133		$	–		$	4,133
Accrued expenses and other current liabilities		743			175			918
Deferred revenue		150			–			150
Deferred revenue Invekra		46			–			46
Operating lease liabilities		135			–			135
Current portion of long-term debt		265			–			265
Total current liabilities		5,472			175			5,647
Operating lease liabilities-non-current		220			1			221
Long-term deferred revenue Invekra		240			–			240
Long-term debt		1,310			–			1,310
Total liabilities		7,242			176			7,418
Commitments and Contingencies (Note 7)
Stockholders’ Equity
Convertible preferred stock, $0.0001 par value; 714,286 shares authorized at June 30, 2020 and March 31, 2020, respectively, 0 and 1.55 shares issued and outstanding at June 30, 2020 and March 31, 2020, respectively		–			–			–
Common stock, $0.0001 par value; 24,000,000 shares authorized at June 30, 2020 and March 31, 2020, 1,966,958 and 1,777,483 shares issued and outstanding at June 30, 2020 and March 31, 2020, respectively		2			–			2
Additional paid-in capital		188,112			–			188,112
Accumulated deficit		(171,253	)		(753	)		(172,006	)
Accumulated other comprehensive loss		(5,451	)		8			(5,443	)
Total stockholders’ equity		11,410			(745	)		10,665
Total liabilities and stockholders’ equity	$	18,652		$	(569	)	$	18,083

Condensed Consolidated Statement of Comprehensive Income (Loss)

	For the Three Months Ended June 30, 2020
	As Originally Reported			Adjustments			As Restated
	(in thousands)			(in thousands)			(in thousands)

Revenues	$	7,254		$	(1,487	)	$	5,767
Cost of revenues		4,291			(779	)		3,512
Gross profit		2,963			(708	)		2,255
Operating expenses
Research and development		476			–			476
Selling, general and administrative		2,369			75			2,444
Total operating expenses		2,845			75			2,920
Income (Loss) from operations		118			(783	)		(665	)
Interest expense		(2	)		–			(2	)
Interest income		2			–			2
Other (expense) income, net		(156	)		35			(121	)
Gain on sale of assets		77			–			77
Income (loss) from continuing operations	$	39		$	(748	)	$	(709	)
Income from discontinued operations (Note 5)		954			(5	)		949
Net income	$	993		$	(753	)	$	240

Net income per share: basic
Continuing operations	$	0.02		$	(0.41	)	$	(0.39	)
Discontinued operations		0.52			–			0.52
	$	0.54		$	(0.41	)	$	0.13
Net income per share: diluted
Continuing operations	$	0.02		$	(0.40	)	$	(0.38	)
Discontinued operations		0.52			(0.01	)		0.51
	$	0.54		$	(0.41	)	$	0.13
Weighted-average number of shares used in per common share calculations: basic		1,839			–			1,839
Weighted-average number of shares used in per common share calculations: diluted		1,843			–			1,843

Other comprehensive income
Net income	$	993		$	(753	)	$	240
Foreign currency translation adjustments		159			8			167
Comprehensive income	$	1,152		$	(745	)	$	407

Condensed Consolidated Statement of Cash Flows

	For the Three Months Ended June 30, 2020
	As Originally Reported			Adjustments			As Restated
	(in thousands)			(in thousands)			(in thousands)
Cash flows from operating activities
Net income	$	993		$	(753	)	$	240
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization		53			–			53
Stock-based compensation		63			–			63
Gain on sale of assets		(872	)		–			(872	)
Changes in operating assets and liabilities:
Accounts receivable		(724	)		446			(278	)
Inventories		(1,945	)		–			(1,945	)
Deferred consideration		31			–			31
Prepaid expenses and other current assets		(323	)		123			(200	)
Operating lease right-of-use assets		49			–			49
Accounts payable		1,660			–			1,660
Accrued expenses and other current liabilities		(1,122	)		175			(947	)
Operating lease liabilities		(46	)		–			(46	)
Deferred revenue		(99	)		–			(99	)
Net cash (used in) provided by operating activities		(2,282	)		(9	)		(2,291	)

Cash flows from investing activities:
Purchases of property and equipment		(52	)		–			(52	)
Deposits		(4	)		–			(4	)
Proceeds from sale of assets		610			–			610
Net cash provided by (used in) investing activities		554			–			554

Cash flows from financing activities:
Proceeds from exercise of common stock purchase warrants		1,490			–			1,490
Proceeds from new debt		1,310			–			1,310
Principal payments on capital leases		–			–			–
Principal payments on long-term debt		(216	)		–			(216	)
Net cash provided by (used in) financing activities		2,584			–			2,584
Effect of exchange rate on cash and cash equivalents		4			9			13
Net increase in cash and cash equivalents		860			–			860
Cash and cash equivalents, beginning of period		3,691			–			3,691
Cash and cash equivalents, end of period	$	4,551		$	–		$	4,551

Supplemental disclosure of cash flow information:
Cash paid for interest	$	2		$	–		$	2