PART I - FINANCIAL INFORMATION [Unaudited Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Financial%20Statements) Sonoma Pharmaceuticals reported decreased revenues and a higher net loss for Q2 2023, with improved operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $15.89 million, while liabilities increased and equity declined as of June 30, 2023 Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 (Unaudited) | March 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $3,544 | $3,820 | | Total current assets | $13,587 | $13,798 | | Total assets | $15,893 | $16,231 | | **Liabilities & Equity** | | | | Total current liabilities | $4,041 | $3,717 | | Total liabilities | $8,651 | $8,254 | | Total stockholders' equity | $7,242 | $7,977 | | Total liabilities and stockholders' equity | $15,893 | $16,231 | [Condensed Consolidated Statements of Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Loss) Revenues decreased 14% year-over-year, leading to a higher net loss of $1.42 million for the quarter Statement of Comprehensive Loss Summary (in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Revenues | $3,427 | $3,983 | | Gross Profit | $1,204 | $1,646 | | Loss from operations | $(1,240) | $(855) | | Net loss | $(1,418) | $(887) | | Net loss per share: basic and diluted | $(0.29) | $(0.29) | [Condensed Consolidated Statements of Cash Flows](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash used in operating activities significantly improved to $0.22 million, ending the quarter with $3.54 million in cash Cash Flow Summary (in thousands) | Activity | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | $(215) | $(1,533) | | Net cash used in investing activities | $(17) | $(23) | | Net cash used in financing activities | $(135) | $(387) | | Net decrease in cash and cash equivalents | $(276) | $(1,810) | | Cash and cash equivalents, end of period | $3,544 | $5,586 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail HOCl product business, going concern doubt, revenue disaggregation, and significant customer concentrations - The company is a global healthcare leader developing and producing stabilized hypochlorous acid (HOCl) products for various applications including wound care, eye care, and dermatology[17](index=17&type=chunk) - Management has concluded that recurring net losses and the need for additional capital raise **substantial doubt** about the company's ability to continue as a going concern[20](index=20&type=chunk) Revenue by Source (in thousands) | Product/Service | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | | :--- | :--- | :--- | | Human Care | $2,750 | $2,168 | | Animal Care | $578 | $787 | | Service and Royalty | $99 | $1,028 | | **Total** | **$3,427** | **$3,983** | - For the three months ended June 30, 2023, three customers (A, B, and C) represented **15%**, **14%**, and **14%** of net revenue, respectively[64](index=64&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=16&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses revenue decline drivers, gross margin decrease, R&D expense increase, and reiterates going concern doubt and capital needs [Business Overview and Strategy](index=16&type=section&id=Business%20Overview%20and%20Strategy) Sonoma's strategy focuses on HOCl product development and global distribution, with recent launches and new application development - The company's core market differentiation is based on being a leading developer and producer of stabilized hypochlorous acid (HOCl) solutions, with a strategy to work with partners globally for marketing and distribution[74](index=74&type=chunk)[75](index=75&type=chunk) - In April 2023, the company introduced **Pediacyn™**, a new pediatric dermatology and wound care product for over-the-counter use[82](index=82&type=chunk) - A new application of HOCl technology for intraoperative pulse lavage irrigation is expected to be ready for commercial use in Europe in **September 2023** and in the U.S. in **2024**[90](index=90&type=chunk) [Results of Operations](index=20&type=section&id=Results%20of%20Operations) Total revenue decreased 14% to $3.43 million, primarily due to a Latin America decline, leading to a higher net loss Revenue by Geographic Region (in thousands) | Region | Q1 FY2024 | Q1 FY2023 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | United States | $806 | $871 | $(65) | (7%) | | Europe | $1,070 | $841 | $229 | 27% | | Asia | $862 | $920 | $(58) | (6%) | | Latin America | $487 | $1,048 | $(561) | (54%) | | Rest of the World | $202 | $303 | $(101) | (33%) | | **Total** | **$3,427** | **$3,983** | **$(556)** | **(14%)** | - The decrease in Latin America revenue was primarily due to a **one-time $750,000 machinery sale** in the prior-year period[109](index=109&type=chunk) - Gross profit margin declined from **41% to 35%** YoY, attributed to the one-time machinery sale last year and changes in product and territory mix[111](index=111&type=chunk) - Research and development expenses increased by **58% to $325,000**, primarily as a result of clinical expenses[112](index=112&type=chunk) [Liquidity and Capital Resources](index=22&type=section&id=Liquidity%20and%20Capital%20Resources) The company ended with $3.5 million cash, may need additional capital due to recurring losses to continue as a going concern - As of June 30, 2023, the company had cash and cash equivalents of **$3.54 million** and working capital of **$9.55 million**[120](index=120&type=chunk)[121](index=121&type=chunk) - Management states that the company may need to raise additional capital to pursue product development, penetrate markets, and continue as a going concern[118](index=118&type=chunk) - Net cash used in operating activities improved significantly to **$215,000** for the quarter, compared to **$1,533,000** in the prior-year period[121](index=121&type=chunk)[122](index=122&type=chunk) [Material Trends and Uncertainties](index=23&type=section&id=Material%20Trends%20and%20Uncertainties) Key uncertainties include customer concentration, foreign currency risk, a substantial Mexican tax liability, and broader economic pressures - The company relies on a small number of key customers for a significant portion of its revenues[125](index=125&type=chunk) - A substantial Mexico tax liability, intercompany debt, and other charges are not due until **2027**. Management believes current assets are sufficient to cover this obligation[127](index=127&type=chunk) - The company is exposed to risks from foreign currency declines, particularly the **Euro** and **Mexican Peso**, and is monitoring economic pressures like inflation, shipping costs, and potential recession[126](index=126&type=chunk)[128](index=128&type=chunk)[129](index=129&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=24&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Sonoma Pharmaceuticals is not required to provide market risk disclosures - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[132](index=132&type=chunk) [Controls and Procedures](index=24&type=section&id=Item%204.%20Controls%20and%20Procedures) Disclosure controls and procedures were ineffective as of June 30, 2023, due to material weaknesses, with remediation efforts underway - Management concluded that the company's disclosure controls and procedures were **not effective** as of June 30, 2023[134](index=134&type=chunk) - Remediation measures include hiring an interim CFO and a Controller, improving monitoring, separating duties for financial reporting, and enhancing training[136](index=136&type=chunk) - The material weaknesses will not be considered remediated until the new controls have operated effectively for a sufficient period of time[137](index=137&type=chunk) PART II - OTHER INFORMATION [Legal Proceedings](index=26&type=section&id=Item%201.%20Legal%20Proceedings) The company may be involved in ordinary course legal matters, which management currently deems insignificant - While the company may be involved in ordinary course legal matters, management believes they are currently insignificant[141](index=141&type=chunk) [Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the annual report on Form 10-K - No material changes from risk factors previously disclosed in the annual report on Form 10-K filed on June 21, 2023[142](index=142&type=chunk) [Other Part II Items](index=26&type=section&id=Other%20Part%20II%20Items) The company did not issue unregistered securities or default on senior securities during the quarter - The company did not issue any unregistered securities during the quarter ended June 30, 2023[143](index=143&type=chunk) - There were no defaults upon senior securities during the quarter[144](index=144&type=chunk) [Exhibits](index=27&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including CEO/CFO certifications and various agreements - The report includes a list of exhibits, such as CEO/CFO certifications and various agreements, filed with the SEC[148](index=148&type=chunk)[149](index=149&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from _________________ to _________________ Commission File Number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter) Delaware 68-0423 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Name of registrant as specified in its charter) Delawar ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Name of registrant as specified in its charter) Delaware 68 ...

For transition period from _________________ to _________________ Commission File Number: 001-33216 Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2022 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 SONOMA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Name of registrant as specified in its charter) Delawar ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Name of registrant as specified in its charter) Delawa ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2021 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ______________ Commission file number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Name of registrant as specified in its charter) Delaware 68 ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from _________________ to _________________ Commission File Number: 001-33216 SONOMA PHARMACEUTICALS, INC. (Exact name of registrant as specified in its charter ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 001-33216 SONOMA PHARMACEUTICALS, INC. or (Exact name of registrant as specified in its charter) (State or other jurisdiction ...