aibioSonoma Pharmaceuticals adopts new Section 382 rights agreement
Tickers SNOA
The board replaced an expiring rights agreement with one meant to protect net operating loss carryforwards, with rights tied to holders of record on October 13, 2026.
Key facts
- Company
- Sonoma Pharmaceuticals, Inc. (NASDAQ: SNOA)
- News type
- Company Updates
- Primary source
- Sonoma Pharmaceuticals, Inc. 8-K (2026-10-06)
Sonoma Pharmaceuticals, Inc. entered into a new Section 382 rights agreement on October 6, 2026, with Computershare Inc. as rights agent. The agreement replaces the company's earlier rights agreement dated October 18, 2016, which expires by its terms on October 18, 2026. The Form 8-K filed for the event reports Items 1.01, 3.03 and 5.03.
The terms of the new rights
The agreement provides for a dividend of one preferred stock purchase right for each share of common stock, par value $0.0001 per share, outstanding on October 13, 2026, the record date. Each right entitles its holder to purchase one one-thousandth of a share of Series B Preferred Stock, par value $0.0001 per share, for $10.00, subject to adjustment under the agreement. The board also adopted an Amended and Restated Certificate of Designation of Series B Preferred Stock. The certificate became effective in Delaware on October 6, 2026.
The rights are not exercisable at first. They become exercisable on the distribution date, which is the earlier of two events. The first is the tenth calendar day after the company learns that a person or group beneficially owns 4.99% or more of the outstanding common stock, or that a Grandfathered Person has exceeded its Grandfathered Percentage by 0.5% of the outstanding shares. The second is a date the board may designate after a tender or exchange offer has commenced, or after its first public disclosure, if the offer could result in a person becoming an Acquiring Person.
Holders who owned 4.99% or more on October 6, 2026 are Grandfathered Persons and are not Acquiring Persons unless they exceed their Grandfathered Percentage by 0.5% of the outstanding shares. After a sale, the Grandfathered Percentage becomes the lesser of the prior percentage and the post-sale holding, and a holder below 4.99% stops being one.
The rights expire on the earlier of October 6, 2036 or such earlier date as the net operating losses and other tax benefits have expired or been exhausted, unless they are redeemed or exchanged earlier.
Why the board adopted the agreement
The company says it has experienced and continues to experience substantial operating losses, and that it may carry forward those losses and other tax benefits to offset future earnings. If it experiences an ownership change under Section 382, its ability to use those benefits would be substantially limited. An ownership change generally occurs if 5% shareholders raise their collective ownership by more than 50% over three years.
The board adopted the agreement to protect shareholder value. The company says it believes it can carry forward a significant amount of these benefits, which could be a substantial asset.
The company and its products
Sonoma develops and produces stabilized hypochlorous acid, or HOCl, products for wound care, eye care, dermatological conditions, podiatry, animal health care and non-toxic disinfectants. Its annual report says it sells in over 55 countries and lists a March 2026 U.S. retail launch of a burn relief hydrogel at CVS and Walmart.
Financial position
According to the XBRL financial data, revenue was $19.5 million for the fiscal year ended March 31, 2026, compared with $14.3 million for the prior fiscal year. Research and development expense was $2.3 million and $1.8 million for the two years. Net loss was $3.2 million for fiscal 2026 and $3.5 million for fiscal 2025. Cash from operations was negative $3.9 million for fiscal 2026 and negative $88,000 for fiscal 2025.
The XBRL summary reports cash and cash equivalents of $5.4 million at March 31, 2025, $2.4 million at March 31, 2026 and $5.3 million at June 30, 2026.
What the plan protects, and what it limits
The tax benefits are worth something only if the company earns taxable profit, and it has not: it lost $3.2 million in fiscal 2026 and cash used in operations rose from $88,000 to $3.9 million. The trigger is low, at 4.99%, and the term runs to October 6, 2036, so the plan also works as a takeover defense that can deter a large buyer, whatever the board's stated purpose.