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 | ||
☐ | Transitionreport |
Commission file number 1-32830number: 001-32830
INDIA GLOBALIZATION CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Maryland (State or other jurisdiction of incorporation or organization) | 20-2760393 (I.R.S. Employer Identification No.) |
10224 Falls Road, Potomac, Maryland (Address of principal executive offices) | 20854 (Zip Code) |
(301) 983-0998
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Tradingsymbol(s) | Name of each exchange on whichregistered | ||
Common Stock, par value $0.0001 per share | IGC | NYSE American LLC |
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐ | Accelerated filer ☐ | |||
Non-accelerated filer | Smaller reporting company ☑ | |||
Emerging growth | company☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No
52,534,353 shares of our common stock par value $0.0001, issued andwere outstanding as of January 31, 2018.August 1, 2022.
| June 30, 2022, Form 10-Q
INDIA GLOBALIZATION CAPITAL, INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2017JUNE 30, 2022
Table of Contents
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Item 2. | 25 | ||
Item 3. | 31 | ||
Item 4. | 31 | ||
PART | |||
Item 1. | 32 | ||
Item 1A. | 32 | ||
Item 2. | 32 | ||
Item 3. | 32 | ||
Item 4. | 32 | ||
Item 5. | 32 | ||
Item 6. | 33 | ||
34 | |||
| June 30, 2022, Form 10-Q
FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain “forward-looking statements.” Additionally, we, or our representatives, may, from time to time, make other written or verbal forward-looking statements and discuss plans, expectations, and objectives regarding our business, financial condition, and results of operations. Without limiting the foregoing, statements that are in the future tense, and all statements accompanied by terms such as “believe,”“project,”“expect,”“trend,”“estimate,”“forecast,”“assume,”“intend,”“plan,”“target,”“anticipate,”“outlook,”“preliminary,”“will likely result,”“will continue” and variations of them and similar terms are intended to be “forward-looking statements” as defined by federal securities laws. Such statements are based on currently available information, which management has assessed but which is dynamic and subject to rapid change due to risks and uncertainties that affect our business.
For the next several years, we believe our success is highly correlated with the outcome of our clinical trials and secondarily on the sale of our products and services. The Company may not be able to complete human trials on our investigational drug candidate, or, once conducted, the results of human trials may not be favorable or as anticipated or may reflect lack of efficacy in humans or animals. Precautions including social distancing and travel restrictions, among others, surrounding the ongoing SARS CoV 2 (“COVID-19”) pandemic could lead to delays or expenses greater than anticipated or projected. Failure or delay with respect to any of the above factors could have a material adverse effect on our business, future results of operations, stock price, and financial condition.
Our projections and investments anticipate certain regulatory changes and stable pricing, which may not hold out over the next several years. We may not be able to protect our intellectual property adequately or receive patents. We may not receive regulatory approval for our products, or trials. The patent applications we have licensed may not be granted by the United States Patent and Trademark Office (“USPTO”), even if the Company is in full compliance with USPTO requirements. We may not have adequate resources including financial resources, to successfully conduct all requisite clinical trials, to bring a product based on the above-referenced patented formulations to market, or to pay applicable maintenance fees over time. We may not be able to successfully commercialize our products even if they are successful and receive regulatory approval, including, but not limited to, based on the Food and Drug Administration’s (“FDA”) current position on hemp and hemp-based products. Failure or delay with respect to any of the factors above could have a material adverse effect on our business, future results of operations, stock price, and financial condition.
This document also contains statements that are not approved by the FDA, including statements on hemp and hemp extracts and their potential efficacy on humans and animals. While these statements and claims are intended to be in compliance with federal and state laws, we cannot guarantee such compliance.
We caution you not to place undue reliance on forward-looking statements, which are based upon assumptions, expectations, plans, and projections subject to risks and uncertainties, including those, if any, identified in the “Risk Factors” set forth in this report or in our annual report on Form 10-K for the fiscal year ended March 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on June 23, 2022, that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements speak only as of the date when they are made. Except as required by federal securities law, we do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements.
| June 30, 2022, Form 10-Q
PART I – FINANCIAL INFORMATION
Item 1. Financial Statements
India Globalization Capital, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(All amounts in USD,thousands, except number of shares)
(Unaudited)
| As of | ||||||||
| 31-December- 17 | 31-March - 17 | |||||||
| (unaudited) | (audited) | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 1,690,792 | $ | 538,029 | ||||
| Accounts receivable, net of allowances | 1,155,229 | 752,926 | ||||||
| Prepaid expenses and other current assets | 379,785 | 410,408 | ||||||
| Short-term investments | - | 1,880,000 | ||||||
| Total current assets | $ | 3,225,806 | $ | 3,581,363 | ||||
| Goodwill | 198,169 | 198,169 | ||||||
| Intangible assets | 124,272 | - | ||||||
| Property, plant and equipment, net | 951,351 | 953,936 | ||||||
| Investment | 6,015,634 | 6,011,114 | ||||||
| Other non-current assets | 820,913 | 539,720 | ||||||
| Total long-term assets | $ | 8,110,339 | $ | 7,702,939 | ||||
| Total assets | $ | 11,336,145 | $ | 11,284,302 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Trade payables | 674,882 | 416,532 | ||||||
| Accrued expenses | 175,200 | 181,465 | ||||||
| Other current liabilities | 474,101 | 691,714 | ||||||
| Total current liabilities | $ | 1,324,183 | $ | 1,289,711 | ||||
| Long-term borrowings | - | 452,080 | ||||||
| Loans- others | 737,097 | 392,226 | ||||||
| Notes payable | 1,800,000 | 1,800,000 | ||||||
| Total non-current liabilities | $ | 2,537,097 | $ | 2,644,306 | ||||
| Total liabilities | $ | 3,861,280 | $ | 3,934,017 | ||||
| Stockholders’ equity: | ||||||||
| Common stock — $.0001 par value; 150,000,000 shares authorized; 28,272,667 issued and outstanding as of March 31, 2017 and 29,499,790 issued and outstanding as of December 31, 2017. | $ | 2,950 | $ | 2,827 | ||||
| Additional paid-in capital | 62,737,631 | 61,413,533 | ||||||
| Accumulated other comprehensive income | (2,037,529 | ) | (2,047,780 | ) | ||||
| Retained earnings/(deficit) | (53,219,180 | ) | (52,009,459 | ) | ||||
| Total equity attributable to Parent | $ | 7,483,872 | $ | 7,359,121 | ||||
| Non-controlling interest | $ | (9,007 | ) | $ | (8,836 | ) | ||
| Total stockholders’ equity | $ | 7,474,865 | $ | 7,350,285 | ||||
| Total liabilities and stockholders’ equity | $ | 11,336,145 | $ | 11,284,302 | ||||
June 30, 2022 ($) | March 31, 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | 8,053 | 10,460 | ||||||
Accounts receivable, net | 147 | 125 | ||||||
Inventory | 3,622 | 3,548 | ||||||
Deposits and advances | 905 | 978 | ||||||
Total current assets | 12,727 | 15,111 | ||||||
Intangible assets, net | 937 | 917 | ||||||
Property, plant, and equipment, net | 9,161 | 9,419 | ||||||
Claims and advances | 922 | 937 | ||||||
Operating lease asset | 419 | 450 | ||||||
Total long-term assets | 11,439 | 11,723 | ||||||
Total assets | 24,166 | 26,834 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | 456 | 981 | ||||||
Accrued liabilities and others | 1,200 | 1,457 | ||||||
Short-term loans | 3 | 3 | ||||||
Total current liabilities | 1,659 | 2,441 | ||||||
Long-term loans | 143 | 144 | ||||||
Other liabilities | 16 | 16 | ||||||
Operating lease liability | 308 | 341 | ||||||
Total non-current liabilities | 467 | 501 | ||||||
Total liabilities | 2,126 | 2,942 | ||||||
Commitments and Contingencies – See Note 12 | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.0001 par value: authorized 1,000,000 shares, 0 shares issued or outstanding as of June 30, 2022, and March 31, 2022. | ||||||||
Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 51,840,603 and 51,054,017 shares issued and outstanding as of June 30, 2022 and March 31, 2022, respectively. | 117,171 | 116,019 | ||||||
Accumulated other comprehensive loss | (3,187 | ) | (2,968 | ) | ||||
Accumulated deficit | (91,944 | ) | (89,159 | ) | ||||
Total stockholders’ equity | 22,040 | 23,892 | ||||||
Total liabilities and stockholders’ equity | 24,166 | 26,834 | ||||||
The accompanying Notes tonotes should be read in connection with these Condensed Consolidated Financial Statements belowStatements.
| June 30, 2022, Form 10-Q
India Globalization Capital, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except loss per share and share data)
(Unaudited)
Three months ended June 30, | ||||||||
2022 ($) | 2021 ($) | |||||||
Revenue | 212 | 77 | ||||||
Cost of revenue | (70 | ) | (51 | ) | ||||
Gross profit | 142 | 26 | ||||||
Selling, general and administrative expenses | (1,550 | ) | (1,776 | ) | ||||
Research and development expenses | (1,394 | ) | (444 | ) | ||||
Operating loss | (2,802 | ) | (2,194 | ) | ||||
Impairment of investment | - | (37 | ) | |||||
Other income, net | 17 | 443 | ||||||
Loss before income taxes | (2,785 | ) | (1,788 | ) | ||||
Income tax expense/benefit | - | - | ||||||
Net loss attributable to common stockholders | (2,785 | ) | (1,788 | ) | ||||
Foreign currency translation adjustments | (219 | ) | (86 | ) | ||||
Comprehensive loss | (3,004 | ) | (1,874 | ) | ||||
Loss per share attributable to common stockholders: | ||||||||
Basic and diluted | $ | (0.05 | ) | $ | (0.04 | ) | ||
Weighted-average number of shares used in computing loss per share amounts: | 51,616,598 | 47,910,866 | ||||||
The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
| June 30, 2022, Form 10-Q
India Globalization Capital, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in thousands)
(Unaudited)
Number of Common Shares | Common Stock and Additional Paid in Capital ($) | Accumulated Deficit ($) | Accumulated Other Comprehensive Loss ($) | Total Stockholders’ Equity ($) | ||||||||||||||||
Balances as of March 31, 2021 | 47,827 | 109,720 | (74,143 | ) | (2,774 | ) | 32,803 | |||||||||||||
Common stock-based compensation and expenses, net | - | 125 | - | - | 125 | |||||||||||||||
Issuance of common stock through offering (net of expenses) | 500 | 726 | - | - | 726 | |||||||||||||||
Other adjustments | (43 | ) | (43 | ) | - | - | (43 | ) | ||||||||||||
Net loss | - | - | (1,788 | ) | - | (1,788 | ) | |||||||||||||
Loss on foreign currency translation | - | - | - | (86 | ) | (86 | ) | |||||||||||||
Balances as of June 30, 2021 | 48,284 | 110,528 | (75,931 | ) | (2,860 | ) | 31,737 | |||||||||||||
Balances as of March 31, 2022 | 51,054 | 116,019 | (89,159 | ) | (2,968 | ) | 23,892 | |||||||||||||
Common stock-based compensation and expenses, net | 787 | 1,152 | - | - | 1,152 | |||||||||||||||
Issuance of common stock through offering (net of expenses) | - | - | - | - | - | |||||||||||||||
Net loss | - | - | (2,785 | ) | - | (2,785 | ) | |||||||||||||
Loss on foreign currency translation | - | - | - | (219 | ) | (219 | ) | |||||||||||||
Balances as of June 30, 2022 | 51,841 | 117,171 | (91,944 | ) | (3,187 | ) | 22,040 | |||||||||||||
The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
| June 30, 2022, Form 10-Q
India Globalization Capital, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
Three months Ended June 30, | ||||||||
2022 ($) | 2021 ($) | |||||||
Cash flows from operating activities: | ||||||||
Net loss | (2,785 | ) | (1,788 | ) | ||||
Adjustment to reconcile net loss to net cash: | ||||||||
Depreciation and amortization | 162 | 157 | ||||||
Impairment of non-marketable securities | - | 37 | ||||||
Common stock-based compensation and expenses, net | 1,152 | 125 | ||||||
Loss on sale of Fixed Asset | 68 | - | ||||||
Forgiveness of PPP Loan | - | (430 | ) | |||||
Changes in: | ||||||||
Accounts receivables, net | (23 | ) | 13 | |||||
Inventory | (74 | ) | 2 | |||||
Deposits and advances | 73 | 4 | ||||||
Claims and advances | 15 | 7 | ||||||
Accounts payable | (524 | ) | 90 | |||||
Accrued and other liabilities | (258 | ) | (46 | ) | ||||
Operating lease asset | 31 | (50 | ) | |||||
Operating lease liability | (33 | ) | 28 | |||||
Net cash used in operating activities | (2,196 | ) | (1,851 | ) | ||||
Cash flow from investing activities: | ||||||||
Purchase of property, plant, and equipment | (127 | ) | (93 | ) | ||||
Acquisition and filing cost of patents and rights | (31 | ) | (2 | ) | ||||
Net cash used in investing activities | (158 | ) | (95 | ) | ||||
Cash flows from financing activities: | ||||||||
Issuance of equity stock through offering (net of expenses) | - | 726 | ||||||
Proceeds from/repayment of long-term loan | (1 | ) | - | |||||
Net cash (used in)/provided by financing activities | (1 | ) | 726 | |||||
Effects of exchange rate changes on cash and cash equivalents | (52 | ) | (9 | ) | ||||
Net decrease in cash and cash equivalents | (2,407 | ) | (1,229 | ) | ||||
Cash and cash equivalents at the beginning of the period | 10,460 | 14,548 | ||||||
Cash and cash equivalents at the end of the period | 8,053 | 13,319 | ||||||
Supplementary information: | ||||||||
Cash paid for interest | - | |||||||
Non-cash items: | ||||||||
Common stock issued/granted for stock-based compensation, including patent acquisition | 1,152 | 125 | ||||||
Forgiveness of PPP Loan | - | (430 | ) | |||||
Amortization of operating lease | 28 | 27 | ||||||
The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
| June 30, 2022, Form 10-Q
India Globalization Capital, Inc.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 2022
(in thousands, except for share data and loss per share, unaudited)
Unless the context requires otherwise, all references in this report to “IGC,”“the Company,”“we,”“our” and/or “us” refer to India Globalization Capital, Inc., together with our subsidiaries and beneficially owned subsidiary. Our public filings with the Securities and Exchange Commission, the “SEC,” are available on www.sec.gov. The information contained on our various websites, including www.igcinc.us, is not incorporated by reference in this report, and you should not consider such information to be a part of this report. We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider such information to be a part of this report.
NOTE 1 – BUSINESS DESCRIPTION
Overview
IGC has 2 business segments: Infrastructure and Life Sciences.
Infrastructure Segment
The Infrastructure segment involves the Notesexecution of construction contracts and the rental of heavy construction equipment. Since our inception, the Company has operated its Infrastructure segment from India.
Life Sciences Segment
The Life Sciences segment involves our over the counter products (“OTC”) and our biopharmaceutical products.
Over the Counter Products: We have created a cannabinoid-based women’s wellness brand, Holief™ available through online channels and a CBD-caffeine-infused energy drink, Sunday Seltzer™, available through wholesale channels.
● | Holief™ is an all-natural, non-GMO, vegan, line of OTC products aimed at treating menstrual cramps (dysmenorrhea) and premenstrual symptoms (“PMS”). |
● | Sunday Seltzer™ is an all-natural, organic, carbonated energy drink with natural caffeine from green tea extract, CBD, vitamins B, vitamin C, no added sugars, and no preservatives. The energy drink is available in two flavors, pomegranate-lemon, and peach-ginger. In addition, Sunday Seltzer™ is also available in four flavors with CBD, vitamins B, vitamin C, and no caffeine. |
Both Holief™ and Sunday Seltzer™ are compliant with relevant federal, state, and local laws, and regulations.
Biopharmaceutical:
Since 2014, this part of our business has focused primarily on the potential uses of phytocannabinoids, including Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”), in combination with other compounds to treat multiple diseases, including Alzheimer’s. As a company engaged in the clinical-stage biopharmaceutical industry, we focus our research and development efforts, subject to results of future clinical trials, on seeking pharmaceutical solutions that may a) alleviate neuropsychiatric symptoms such as agitation, anxiety, and depression associated with dementia in Alzheimer’s disease; and b) halt the onset, progression, or cure Alzheimer’s disease. We currently have one investigational new drug candidate, “IGC-AD1,” in a Phase 2 clinical trial for agitation in dementia from Alzheimer’s. IGC-AD1 is a cannabis-based compound, which is made up of ultra-low doses of THC along with another compound as active ingredients. The second molecule, TGR-63, is an enzyme inhibitor that has been shown, in pre-clinical trials, to reduce neurotoxicity in Alzheimer’s cell lines. Neurotoxicity causes cell dysfunction and death in Alzheimer’s disease. If shown to be efficacious in halting this process, this inhibitor has the potential to treat Alzheimer’s disease by ameliorating Aβ plaques.
The Company completed all dose escalation studies, and as announced by the Company on December 2, 2021, the results of the clinical trial have been submitted in the Clinical/Statistical Report (“CSR”) filed with U.S. Food and Drug Administration (the “FDA”). The Company is motivated by the potential that, with future successful results from appropriate further trials, IGC-AD1 could contribute to relief for some of the 55 million people around the world expected to be impacted by Alzheimer’s disease by 2030 (WHO, 2021).
| June 30, 2022, Form 10-Q
Phase 2 Clinical Trial Update
The Company has initiated a protocol titled “A Phase 2, Multi-Center, Double-Blind, Randomized, Placebo-controlled, trial of the safety and efficacy of IGC-AD1 on agitation in participants with dementia due to Alzheimer’s disease.” The protocol is powered at 146 Alzheimer’s patients with half receiving placebo and is a superiority, parallel group study. While subject to changes, we expect to conduct the trial at three sites, one in Canada and two in the U.S. The primary end point is agitation in dementia due to Alzheimer’s disease as rated by the Cohen-Mansfield Agitation Inventory (CMAI) over a six-week period. The Phase 2 trial will also look at eleven exploratory objectives, including, changes in anxiety, changes in cognitive processes such as attention, orientation, language, and visual spatial skills as well as memory, changes in depression, delusions, hallucinations, euphoria/elation, apathy, disinhibition, irritability, aberrant motor behavior, sleep disorder, appetite, quality of life, and caregiver burden. In addition, we will assess the impact of an important gene (CYP2C9) that encodes an enzyme that is involved in metabolizing the active ingredients of IGC-AD1 and many other drugs. Each participant will receive two doses of IGC-AD1 (b.i.d.) or two doses of placebo per day for six-weeks.
To the best of our knowledge, this is the first human clinical trial using ultra low doses of THC, in combination with another molecule, to treat symptoms of dementia in Alzheimer’s patients. THC is a naturally occurring cannabinoid produced by the cannabis plant. It is known for being a psychoactive substance that can impact mental processes in a positive or negative way depending on the dosage. THC is biphasic, meaning that low and high doses of the substance may affect mental and physiological processes in substantially different ways. For example, in some patients, low doses may relieve a symptom, whereas high doses may amplify a symptom. Ultimately, the goal of IGC’s research is to discover and analyze whether, and at what level of dosing, IGC-AD1 provides relief of a given symptom. IGC’s trial is based on micro dosing on patients suffering from Alzheimer’s disease. With further trials, subject to FDA approvals, the Company intends to pursue the efficacy of IGC-AD1 for indications of Agitation in patients with dementia from Alzheimer’s.
Other Developments
Our pipeline of investigational and development cannabinoid formulations also includes pain creams and tinctures for pain relief. We believe that the biopharmaceutical component of our Life Sciences strategy will at least take several more years to mature and involves considerable risk; however, we also believe it may involve greater defensible growth potential and first-to-market advantage.
Although there can be no assurance, we believe this strategy has the potential to improve existing products and lead to the Audited Consolidated Financial Statements containedcreation of new products, which, based on scientific study and research, may offer positive results for the management of certain conditions, symptoms, and side effects.
While the bulk of our medium and longer-term focus is on clinical trials and getting IGC-AD1 to be an FDA approved drug, our shorter-term strategy, is to use our resources to provide white label services and market Holief™ and Sunday Seltzer™. We believe this may provide us with several profit opportunities, although there can be no assurance of such profit opportunities.
The Company has filed fifteen (15) patent applications to address various diseases such as Alzheimer’s, Central Nervous System (“CNS”) disorders, pain, stammering, seizures in cats and dogs, eating disorders, stress-relief, and calm-restoring beverage, and fatigue. As of June 30, 2022, we have four patents.
In addition, we license two patent filings, from the:
● | University of South Florida titled “Ultra-Low dose THC as a potential therapeutic and prophylactic agent for Alzheimer’s Disease.” The U.S. Patent and Trademark Office (“USPTO”) issued a patent (#11,065,225) for this filing on July 20, 2021. The granted patent relates to IGC’s proprietary formulation, IGC-AD1, intended to assist in the treatment of individuals living with Alzheimer’s disease; |
● | Jawaharlal Nehru Centre for Advanced Scientific Research (“JNCASR”) for exclusive global rights corresponding to the molecules, technology, patent, and patent filings that were the subject of JNCASR’s research into naphthalene monoimide (NMI) compounds and the role of NMI compounds have on neurotoxicity associated with Alzheimer’s Disease.” The U.S. Patent and Trademark Office (“USPTO”) issued a patent (#9230708 B2) for this filing on January 5, 2016. |
| June 30, 2022, Form 10-Q
The Company is developing three brands, including Holief™, among others. Holief™ is a non-GMO, vegan, natural, women’s line of OTC products aimed at addressing dysmenorrhea and PMS in women. Holief™, in development, seeks to connect, via a cloud-based platform, women with health care professionals who can help address dysmenorrhea, or period cramps, and PMS. Approximately 31.3 million (Statista, 2021) women in America suffer from dysmenorrhea and PMS.
Business Organization
As of June 30, 2022, the Company had the following operating subsidiaries: Techni Bharathi Private Limited (TBL), IGCare LLC, Holi Hemp, LLC, IGC Pharma LLC, SAN Holdings LLC, Sunday Seltzer, LLC, Hamsa Biopharma India Pvt. Ltd., and Colombia-based beneficially-owned subsidiary Hamsa Biopharma Colombia SAS (formerly Hamsa Biochem SAS) (Hamsa). The Company’s fiscal year is the 52- or 53-week period that ends on March 31. The Company is a Maryland corporation established in 2005. The Company’s public filings with the SEC are available on www.sec.gov.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying condensed consolidated Balance Sheet as of June 30, 2022, and March 31, 2022, condensed consolidated statements of operations for the three months ended June 30, 2022, and 2021, and condensed consolidated statements of changes in stockholders’ deficit for the three months ended June 30, 2022, and 2021, and condensed consolidated statements of cash flows for the three months ended June 30, 2022, and 2021, are unaudited. The consolidated balance sheet as of March 31, 2022, has been derived from audited financial statements, and the accompanying unaudited condensed consolidated financial statements (“interim statements”) of the Company have been prepared in accordance with accounting principles generally accepted in the U.S. (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”) within its Accounting Standards Codification (“ASC”) and under the rules and regulations of the SEC.
Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with the Company’s Annual Report on Form 10-Kaudited consolidated financial statements for the fiscal year ended March 31, 20172022 (“Fiscal 2022”) contained in the Company’s Form 10-K for Fiscal 2022, filed with the SEC on July 14, 2017.
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| Revenues | $ | 762,009 | $ | 249,801 | $ | 1,050,582 | $ | 487,364 | ||||||||
| Cost of revenues (excluding depreciation) | (723,062 | ) | (121,829 | ) | (893,113 | ) | (276,418 | ) | ||||||||
| Selling, general and administrative expenses | (507,332 | ) | (322,891 | ) | (1,217,293 | ) | (959,693 | ) | ||||||||
| Depreciation | (4,989 | ) | (196,103 | ) | (15,297 | ) | (391,617 | ) | ||||||||
| Loss on investments/associates /joint ventures | - | 4,910 | - | (178,925 | ) | |||||||||||
| Operating income /(loss) | $ | (473,374 | ) | $ | (386,112 | ) | $ | (1,075,121 | ) | $ | (1,319,289 | ) | ||||
| Interest expense | (60,527 | ) | (46,465 | ) | (145,905 | ) | (136,421 | ) | ||||||||
| Interest income & other income (net) | 1,090 | 359,104 | 9,401 | 372,957 | ||||||||||||
| Income before income taxes and minority interest attributable to non-controlling interest | $ | (532,811 | ) | $ | (73,473 | ) | $ | (1,211,625 | ) | $ | (1,082,753 | ) | ||||
| Net income/(loss) | $ | (532,811 | ) | $ | (73,473 | ) | $ | (1,211,625 | ) | $ | (1,082,753 | ) | ||||
| Non-controlling interests in earnings of subsidiaries | (230 | ) | 38,088 | (634 | ) | 26,848 | ||||||||||
| Net income/(loss) attributable to common stockholders | $ | (532,581 | ) | $ | (111,561 | ) | $ | (1,210,991 | ) | $ | (1,109,601 | ) | ||||
| Earnings/(loss) per share attributable to common stockholders: | ||||||||||||||||
| Basic | $ | (0.02 | ) | $ | (0.00 | ) | $ | (0.04 | ) | $ | (0.04 | ) | ||||
| Diluted | $ | (0.02 | ) | $ | (0.00 | ) | $ | (0.04 | ) | $ | (0.04 | ) | ||||
| Weighted-average number of common shares used in computing earnings per share amounts: | ||||||||||||||||
| Basic | 28,169,292 | 27,446,095 | 27,126,208 | 27,446,095 | ||||||||||||
| Diluted | 28,169,292 | 27,446,095 | 27,126,208 | 27,446,095 | ||||||||||||
Principles of consolidation
The interim statements include the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 filed with the SEC on July 14, 2017.
| Three months ended December 31, | ||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| IGC | Non-controlling interest | Total | IGC | Non-controlling interest | Total | |||||||||||||||||||
| Net income/(loss) | $ | (532,581 | ) | $ | (230 | ) | $ | (532,811 | ) | $ | (111,561 | ) | $ | 38,088 | $ | (73,473 | ) | |||||||
| Foreign currency translation adjustments | 21,174 | - | 21,174 | 180,000 | - | 180,000 | ||||||||||||||||||
| Comprehensive income/(loss) | $ | (511,407 | ) | $ | (230 | ) | $ | (511,637 | ) | $ | 68,439 | $ | 38,088 | $ | 106,527 | |||||||||
| Nine months ended December 31, | ||||||||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||||||||
| IGC | Non-controlling interest | Total | IGC | Non-controlling interest | Total | |||||||||||||||||||
| Net income/(loss) | $ | (1,210,991 | ) | $ | (634 | ) | $ | (1,211,625 | ) | $ | (1,109,601 | ) | $ | 26,848 | $ | (1,082,753 | ) | |||||||
| Foreign currency translation adjustments | 10,252 | - | 10,252 | 128,150 | - | 128,150 | ||||||||||||||||||
| Comprehensive income/(loss) | $ | (1,200,739 | ) | $ | (634 | ) | $ | (1,201,373 | ) | $ | (981,451 | ) | $ | 26,848 | $ | (954,603 | ) | |||||||
| Nine months ended December 31, | ||||||||
| 2017 | 2016 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income (loss) | $ | (1,211,625 | ) | $ | (1,082,753 | ) | ||
| Adjustment to reconcile net income/(loss) to net cash: | ||||||||
| Depreciation | 15,297 | 391,617 | ||||||
| Bad debts written off/creditors restated | 24 | - | ||||||
| Loss from Investments /joint venture /associates | 178,925 | |||||||
| Non-cash interest expenses | 115,500 | 104,015 | ||||||
| Stock base compensation and expense | 426,111 | - | ||||||
| Changes in: | ||||||||
| Accounts receivable | $ | (401,811 | ) | $ | 299,848 | |||
| Other current assets | 48,695 | 78,348 | ||||||
| Trade payables | 258,350 | 48,719 | ||||||
| Other current liabilities | (223,877 | ) | (501,787 | ) | ||||
| Net cash provided/(used) in operating activities | $ | (973,336 | ) | $ | (483,068 | ) | ||
| Cash flow from investing activities: | ||||||||
| Purchase/addition of property, plant and equipment | (11,224 | ) | (128,765 | ) | ||||
| Proceeds from short term investment | (4,106 | ) | (27,502 | ) | ||||
| Deposit towards acquisition (net of cash acquired) | - | (114,427 | ) | |||||
| Non-current assets | (286,167 | ) | - | |||||
| Net cash provided/(used) by investing activities | $ | (301,497 | ) | $ | (270,694 | ) | ||
| Cash flows from financing activities: | ||||||||
| Proceeds from share issue | $ | 2,636,478 | $ | 438,165 | ||||
| Net movement in short-term borrowing | - | (27,762 | ) | |||||
| Proceeds /(repayment) from long-term borrowing | (452,080 | ) | (910,583 | ) | ||||
| Proceeds from loans | 344,871 | 379,170 | ||||||
| Expense for raising funds & issuance of stock | (111,253 | ) | - | |||||
| Net cash provided/(used) by financing activities | $ | 2,418,016 | $ | (121,010 | ) | |||
| Effects of exchange rate changes on cash and cash equivalents | 9,580 | 128,134 | ||||||
| Net increase/(decrease) in cash and cash equivalents | 1,152,763 | (746,638 | ) | |||||
| Cash and cash equivalent at the beginning of the period | 538,029 | 1,490,693 | ||||||
| Cash and cash equivalent at the end of the period | $ | 1,690,792 | $ | 744,055 | ||||
| Supplementary information: | ||||||||
| Cash paid for interest | $ | 30,405 | $ | 32,406 | ||||
| Non-cash items: | ||||||||
| Common stock issued for interest payment on notes payable | $ | 115,500 | $ | 104,015 | ||||
| Common stock issued including ESOP, consultancy and other | $ | 465,158 | $ | - | ||||
Use of estimates
The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulationspreparation of the U.S. Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by United States generally accepted accounting principles (“GAAP”) for complete financial statements. In preparing the financial statements in conformity with U.S. GAAP requires management is required to make estimates and assumptions that could affect the reported amounts reported in these condensed consolidatedof assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and accompanying notes.the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. The results for interim periods do not necessarily indicate
Management believes that the results that may be expected for any other interim period or forestimates and assumptions used in the full year. The significant accounting policies adopted bypreparation of the Company, in respect of these consolidated financial statements are set outprudent and reasonable. Significant estimates and assumptions are generally used for, but not limited to, allowance for uncollectible accounts receivable; sales returns; normal loss during production; future obligations under employee benefit plans; the useful lives of property, plant equipment; intangible assets; valuations; impairment of goodwill and investments; recoverability of advances; the valuation of options granted, and warrants issued; and income tax and deferred tax valuation allowances, if any. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management becomes aware of changes in circumstances surrounding the estimates. Critical accounting estimates could change from period to period and could have a material impact on IGC’s results, operations, financial position, and cash flows. Changes in estimates are reflected in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017. Therefore, the Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and respective notes containedfinancial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2017 filed with the SEC on July 14, 2017. In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been includedperiod in which changes are made and, if material, their effects are disclosed in the Financial Statements. Thenotes to the condensed consolidated financial statements include the accountsstatements.
| June 30, 2022, Form 10-Q
Presentation and all its subsidiaries that are more than 50% owned and controlled. The Company consolidates the subsidiaries into its consolidated financial statements. Transactions between the Company and its subsidiaries have been eliminated in the consolidated financial statements.
IGC operates in India, U.S., Colombia, and Hong Kong, and Malaysia and a substantial portion of the Company’s salesfinancials are denominated in USD, INR, and RM.the Indian Rupee (“INR”), the Hong Kong Dollar (“HKD”), or the Colombian Peso (“COP”). As a result, changes in the relative values of the U.S. dollar andDollar (“USD”), the INR, the HKD, or the RMCOP affect revenues and profits as the results are translated into U.S. dollars in the consolidated and pro formaour financial statements.
The accompanying financial statements are reported in U.S. dollars.USD. The INR, HKD, and the RMCOP are the functional currencies for certain subsidiaries of the Company. The translation of the functional currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues costs and expenses using average exchange rates prevailing during the reporting periods. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as other comprehensive income/(loss), a separate component of shareholders’ equity. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of operations.
Impairment of long – lived assets
The Company reviews its long-lived assets, with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Such circumstances include, though are not limited to, significant or sustained declines in revenues or earnings, future anticipated cash flows, business plans, and material adverse changes in the economic climate, such as changes in the operating environment, competitive information, and impact of changes in government policies. For assets that the Company intends to hold for use if the total of the expected future undiscounted cash flows produced by the assets or subsidiary company is less than the carrying amount of the assets, a loss is recognized for the difference between the fair value and carrying value of the assets. For assets, the Company intends to dispose of by sale, a loss is recognized for the amount by which the estimated fair value less cost to sell is less than the carrying value of the assets. Fair value is determined based on quoted market prices, if available, or other valuation techniques including discounted future net cash flows. Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment.
No impairment has been recorded for the three months ended June 30, 2022, and 2021.
Short-term and long-term investments
Our policy for short-term and long-term investments is to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relation to our investment guidelines and market conditions. Short-term and long-term investments consist of corporate, various government agency and municipal debt securities, as well as certificates of deposit that have maturity dates that are greater than 90 days. Certificates of deposit and commercial paper are carried at cost which approximates fair value. Available-for-sale securities: Investments in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position.
Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs. Where the Company’s current fiscal year endsownership interest is in excess of 20% and the Company has a significant influence, the Company has accounted for the investment based on March 31, 2018. Unless the context requires otherwise, all referencesequity method in this report to “IGC,accordance with ASC Topic 323, “Investments – Equity method and Joint Ventures.” “we,” “our”Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated statements of operations and “us” refer to India Globalization Capital, Inc., togetherits share of post-acquisition movements in accumulated other comprehensive income / (loss) is recognized in other comprehensive income / (loss). Where the Company does not have significant influence, the Company has accounted for the investment in accordance with its subsidiaries, as listed and describedASC Topic 321, “Investments-Equity Securities.”
As of June 30, 2022, the Company does not have any investment in its Annual Report onmarketable securities.
| June 30, 2022, Form 10-K filed with the SEC on July 14, 2017. We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider it a part of this report. Our filings are available on www.sec.gov. The information contained on our website, www.igcinc.us, is not incorporated by reference in this report, and you should not consider it a part of this report.
Stock–based compensation
The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC Topic 718, “Stock-Based Compensation.” The Company expenses stock-based compensation to employees over the requisite vesting period based on the estimated grant-date fair value of the awards. The Company accounts for forfeitures as they occur. Stock-based awards are recognized on a straight-line basis over the requisite vesting period. For stock-based employee compensation cost recognized at any date will be at least equal to the amount attributable to the share-based compensation that is vested at that date. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable by best of management estimate. For performance-based awards with a vesting schedule based entirely on the attainment of performance conditions, stock-based compensation expense associated with each tranche is recognized over the expected achievement period for the operational milestone, beginning at the point in time when the relevant operational milestone is considered probable to be achieved.
For market-based awards, stock-based compensation expense is recognized over the expected achievement period. The fair value of such awards is estimated on the grant date using binomial lattice model.
The Company estimates the fair value of stock option grants using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent Management’s best estimates. Generally, the closing share price of the Company’s common stock on the date of grant is considered the fair value of the share. The volatility factor is determined based on the Company’s historical stock prices. The expected term represents the period that our stock-based awards are expected to be outstanding. The Company has never declared or paid any cash dividends. For further information refer to Note 14, “Stock-Based Compensation” of Notes to Consolidated Financial Statements.
Accounts receivable net
We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends. If the financial condition of a customer deteriorates, additional allowances amounted to $1,155,229 and $752,926 asmay be required. We had $147 thousand of December 31, 2017 and March 31, 2017, respectively. The accounts receivable, net of reservesprovision for the quarterdoubtful debt of $92 thousand as of June 30, 2022, as compared to $124 thousand of accounts receivable, net of provision for the doubtful debt of $93 thousand as of March 31, 2022.
Inventory
Inventory is valued at the lower of cost or net realizable value, which is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted hemp crude oil, hemp-based isolate, growing crops, harvested crops, and herbal oils, among others. Work-in-progress also includes product manufacturing in process, costs of growing hemp, in accordance with applicable laws and regulations including but not limited to labor, utilities, fertilizers, and irrigation. Inventory is primarily accounted for using the weighted average cost method. Primary costs include raw materials, packaging, direct labor, overhead, shipping, and the depreciation of manufacturing equipment. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance, and property taxes.
Abnormal amounts of idle facility expense, freight, handling costs, scrap, discontinued products and wasted material (spoilage) are expensed in the period they are incurred.
Fair value of financial instruments
ASC 820, “Fair Value Measurement” defines fair value as 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. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
| June 30, 2022, Form 10-Q
The carrying amounts of the Company’s financial instrument include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate their fair values due to the nature of the items. Please refer to Note 15 – “Fair Value of Financial Instruments”, for further information.
Earnings/(Loss) per share
The computation of basic loss per share for the three months ended December 31, 2017 come primarilyJune 30, 2022, excludes potentially dilutive securities of approximately 7.1 million shares which includes share options, unvested shares such as restricted shares and restricted share units, granted to employees, non-employees, and advisors, and shares from construction management,the conversion of outstanding units, if any because their inclusion would be anti-dilutive.
The weighted average number of shares outstanding for the three months ended June 30, 2022, and 2021, used for the computation of basic earnings per share (“EPS”) is 51,616,598 and 47,910,866, respectively. Due to the loss incurred by the Company during the three months ended June 30, 2022, and 2021, all the potential equity shares are anti-dilutive, and accordingly, the fully diluted EPS is equal to the basic EPS.
Cybersecurity
We have a cybersecurity policy in place and have taken cybersecurity measures that, while there can be no assurance, we expect are likely to safeguard the Company against breaches. In the three months ended June 30, 2022, there were no impactful breaches in cybersecurity.
Intangible assets
The Company’s intangible assets are accounted for in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangible assets having indefinite lives are not amortized, but instead are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value. We perform an impairment analysis on March 1 annually on the indefinite-lived intangible assets following the steps laid out in ASC 350-30-35-18. Our annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, we review events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of the intangible assets. If quantitative analysis is necessary, we would analyze various aspects including revenues from the business, associated with the intangible assets. In addition, intangible assets will be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred. The Company has analyzed a variety of factors in light of the known impact to date of the COVID-19 pandemic on its business to determine if a circumstance could trigger an impairment loss, and, at this time and based on the information presently known, does not believe it is more likely than not that an impairment loss has been incurred.
Intangible assets with finite useful lives are amortized using the straight-line method over their estimated period of benefit. In accordance with ASC 360-10-35-21, definite lived intangibles are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value.
The Company intends to capitalize trademarks and related expenses exceeding $2,500 per trademark. Management may also capitalize trademarks and related expenses up to $2,500 per trademark based on its potential and benefit in coming years.
Revenue Recognition
The Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (ASC 606). The core principle of this standard is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.
ASC 606 prescribes a 5-step process to achieve its core principle. The Company recognizes revenue from trading, rental, or product sales as follows:
I. Identify the contract with the customer.
II. Identify the contractual performance obligations.
III. Determine the amount of consideration/price for the transaction.
IV. Allocate the determined amount of consideration/price to the performance obligations.
V. Recognize revenue when or as the performing party satisfies performance obligations.
| June 30, 2022, Form 10-Q
The consideration/price for the transaction (performance obligation(s)) is determined as per the agreement or invoice (contract) for the services and products in the Infrastructure and Life Sciences segment.
Revenue in the Infrastructure Business is recognized for the renting business when the equipment is rented, and terms of the agreement have been fulfilled during the period. The revenue from the purchase and resale of physical infrastructure commodities is recognized once the bill of lading along with the invoice has been transferred to the customer. Revenue from the execution of infrastructure contracts is recognized on the basis of the output method as and when part of the performance obligation has been completed and approval from the contracting agency has been obtained after a survey of the performance completion as of that date. In the Life Sciences segment, the revenue from the wellness and lifestyle business is recognized once goods have been sold to the customer and the performance obligation has been completed. In retail sales, we offer consumer products through our online stores. Revenue is recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier or, to the customer directly. Revenue from tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer. We license our products to processors. The royalty income from licensing is recognized once goods have been sold by the processor to its customers.
Net sales disaggregated by significant products and services for the three months ended June 30, 2022, and 2021 are as follows:
(in thousands) Three months ended June 30, | ||||||||
2022 ($) | 2021 ($) | |||||||
Infrastructure segment | ||||||||
Rental income (1) | 10 | - | ||||||
Construction contracts (2) | - | 15 | ||||||
Life Sciences segment | ||||||||
Wellness and lifestyle (3) | 80 | 62 | ||||||
White labeling services (4) | 122 | - | ||||||
Total | 212 | 77 | ||||||
(1) Rental income consists of income from rental of heavy construction equipmentequipment.
(2) Construction contracts consist of the execution of contracts directly or through subcontractors.
(3) Relates to revenue from the Life Sciences segment including the sale of wellness and tradinglifestyle products such as hand sanitizers, bath bombs, lotions, gummies, beverages, hemp crude extract, hemp isolate, and hemp distillate.
(4) Relates to revenue from the Life Sciences segment, including income white label services, which refers to a fully supported product or service that is made by us but sold by another company.
Leases
Lessor Accounting
Under the current ASU guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, “Revenue from Contracts with Customers”, unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component. The amendments in commodities.ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.
| June 30, 2022, Form 10-Q
As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for most the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases.
For leases that are accounted for as operating leases, income is recognized on a straight-line basis over the term of the lease contract. Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being on nonaccrual and the Company stops recognizing leasing income on that date. Payments received on leases in nonaccrual status generally reduce the lease receivable. Leases on nonaccrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full.
Lessee Accounting
The Company adopted ASU 2016-02 effective April 1, 2019, using the modified retrospective approach. The standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as a finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In connection with the adoption, the Company will elect to utilize the modified retrospective presentation whereby the Company will continue to present prior period financial statements and disclosures under ASC Topic 840. In addition, the Company will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. Further, the Company will adopt a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less), and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets.
Under ASU 2016-02 (Topic 842), lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of June 30, 2022.
The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Please refer to “Note 9 - Leases”, for further information.
Recently issued accounting pronouncements
Changes to U.S. GAAP are established by the FASB in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the condensed financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its condensed financial statements.
| June 30, 2022, Form 10-Q
NOTE 3 – INVENTORY
(in thousands) | ||||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||
Raw materials | 2,242 | 2,247 | ||||||
Work-in-Progress | 628 | 584 | ||||||
Finished goods | 752 | 717 | ||||||
Total | 3,622 | 3,548 | ||||||
Inventory in the form of work-in-progress as of June 30, 2022, comprises, but it is not limited to, various hemp-based extracts such as hemp crude oil, hemp distillate, and hemp isolate. Finished goods comprises, but it’s not limited to, hand sanitizers, gummies, lotions, and beverages, among others.
During the three months ended June 30, 2022, the Company wrote off approximately $73 thousand of inventory due to abnormal amounts of idle facility expense, freight, handling costs, scrap, and wasted material (spoilage). This charge was recorded in Selling, General, and Administrative Expenses.
NOTE 4 – OTHER CURRENT DEPOSITS AND NON-CURRENT ASSETSADVANCES
(in thousands) | ||||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||
Advances to suppliers and consultants | 159 | 170 | ||||||
Other receivables and deposits | 495 | 472 | ||||||
Prepaid expense and other current assets | 251 | 336 | ||||||
Total | 905 | 978 | ||||||
The Advances to suppliers and consultants primarily relate to advances to suppliers in our Life Sciences and Infrastructure segments. Prepaid expensesexpense and other current assets consistinclude approximately $125 thousand of the following:
As of December 31, 2017 | As of March 31, 2017 | |||||||
| Prepaid /preliminary expenses | $ | - | $ | 6,750 | ||||
| Advance to suppliers, others & services | 355,490 | 352,850 | ||||||
| Security/statutory advances | 17,320 | 14,216 | ||||||
| Prepaid and accrued interest | 1,459 | 1,436 | ||||||
| Deposit and other current assets | 5,516 | 35,156 | ||||||
| Total | $ | 379,785 | $ | 410,408 | ||||
As of December 31, 2017 | As of March 31, 2017 | |||||||
| Statutory/Other advances | $ | 521,631 | $ | 539,720 | ||||
| Product formulation | 299,282 | - | ||||||
| Total | $ | 820,913 | $ | 539,720 | ||||
NOTE 5 – INTANGIBLE ASSETS AND GOODWILL
| (in thousands) | |||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||
| Amortized intangible assets | ||||||||
Patents | 522 | 290 | ||||||
Other intangibles | 32 | 32 | ||||||
Accumulated amortization | (61 | ) | (51 | ) | ||||
Total amortized intangible assets | 493 | 271 | ||||||
| Other intangible assets | ||||||||
Patents | 444 | 646 | ||||||
Other intangibles | - | - | ||||||
Total unamortized intangible assets | 444 | 646 | ||||||
Total intangible assets | 937 | 917 | ||||||
As of December 31, 2017 | As of March 31, 2017 | |||||||
| Intangible assets at the beginning of the period | $ | - | $ | 113,321 | ||||
| Amortization | - | (113,321 | ) | |||||
| Patent filings and rights | 124,272 | - | ||||||
| Total Intangible assets | $ | 124,272 | $ | - | ||||
| Goodwill of Cabaran Ultima Sdn Bhd | 198,169 | 198,169 | ||||||
| Total Goodwill | $ | 198,169 | 198,169 | |||||
| June 30, 2022, Form 10-Q
The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing 15 patents. It also includes acquisition costs related to domains and licenses.
The amortization of patent and patent rights with finite life is up to 20 years, commencing from the date of grant or acquisition. The amortization expense in the three months ended June 30, 2022, and 2021, amounted to approximately $10 thousand and $5 thousand, respectively.
The Company regularly reviews its intangible assets to determine if any intangible asset is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period and concluded that, as of June 30, 2022, there was no impairment.
Estimated amortization expense | (in thousands) ($) | |||
For the year ended 2024 | 11 | |||
For the year ended 2025 | 12 | |||
For the year ended 2026 | 14 | |||
For the year ended 2027 | 15 | |||
For the year ended 2028 | 16 | |||
NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT
(in thousands, except useful life) | |||||||||||
Useful Life (years) | As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||||
Land | N/A | 4,266 | 4,438 | ||||||||
Buildings and facilities | 25 | 2,966 | 2,810 | ||||||||
Plant and machinery | 5-20 | 4,351 | 4,594 | ||||||||
Computer equipment | 3 | 241 | 241 | ||||||||
Office equipment | 3-5 | 184 | 145 | ||||||||
Furniture and fixtures | 5 | 142 | 141 | ||||||||
Vehicles | 5 | 161 | 163 | ||||||||
Construction in progress | N/A | - | 108 | ||||||||
Total gross value | 12,311 | 12,639 | |||||||||
Less: Accumulated depreciation | (3,150 | ) | (3,220 | ) | |||||||
Total property, plant, and equipment, net | 9,161 | 9,419 | |||||||||
The depreciation expense in the following:
| Category | Useful Life (years) | As of December 31, 2017 | As of March 31, 2017 | |||||||||
| Building (flat) | 25 | $ | 245,035 | $ | 241,181 | |||||||
| Plant and machinery | 20 | 1,737,381 | 1,710,055 | |||||||||
| Computer equipment | 3 | 160,643 | 157,349 | |||||||||
| Office equipment | 5 | 121,372 | 119,528 | |||||||||
| Furniture and fixtures | 5 | 72,167 | 70,368 | |||||||||
| Vehicles | 5 | 296,288 | 292,764 | |||||||||
| Assets under construction | N/A | 969,573 | 957,880 | |||||||||
| Total | $ | 3,602,459 | $ | 3,549,125 | ||||||||
| Less: Accumulated depreciation | $ | (2,651,108 | ) | $ | (2,595,189 | ) | ||||||
| Net Assets | $ | 951,351 | $ | 953,936 | ||||||||
As of December 31, 2017 | As of March 31, 2017 | |||||||
| Investment in equity shares of unlisted company & associates | $ | 67,912 | $ | 63,392 | ||||
| Investment in affiliate | 773,111 | 773,111 | ||||||
| Investment in land | 5,174,611 | 5,174,611 | ||||||
| Total | $ | 6,015,634 | $ | 6,011,114 | ||||
NOTE 7 – LEFT BLANK INTENTIONALLY
| June 30, 2015, and the Company is pursuing its rights under the terms of the Purchase Agreement to recover certain damages. Value of investment in our books is $773,111 as on December 31, 2017.
As of December 31, 2017 | As of March 31, 2017 | |||||||
| Statutory payables | $ | 16,344 | $ | 15,203 | ||||
| Employee related liabilities | 457,757 | 676,511 | ||||||
| Total | $ | 474,101 | $ | 691,714 | ||||
NOTE 8 – CLAIMS AND ADVANCES
(in thousands) | ||||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||
Claims receivable (1) | 354 | 368 | ||||||
Non-current advances (2) | 568 | 569 | ||||||
Total | 922 | 937 | ||||||
(1) | The claims receivable is due from the Cochin International Airport (“CIA”) which is partially owned by the State Government of Kerala. While the Company has initiated collection proceedings in the Commercial Court of Ernakulam, the Company believes it will be difficult to receive the amount in the next 12 months because of the time required for legal collection proceedings. The decrease in claims receivable was mainly due to foreign exchange translation as a result of a decrease in the value of the Indian Rupee. |
(2) | Includes $200 thousand owed to one of our manufacturers for the purchase of equipment. |
NOTE 9 – LEASES
The Company has short-term leases primarily consisting of spaces with the remaining lease term being less than or equal to 12 months. The total short-term lease expense and cash paid for the three months ended June 30, 2022, and 2021 are approximately $45 thousand and $31 thousand, respectively. The Company also has four operating leases as of June 30, 2022.
America: In November 2019, the Company entered into a lease agreement with a lease term of less than 12 months. This lease was amended in March 2020, with a new lease term from March 1, 2020, to November 30, 2025. The annual lease expense is approximately $122 thousand. The lease contract does not contain any material residual value guarantees or material restrictive covenants. The remaining lease term for the operating lease is 3.4 years with a discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.
Asia: The Company renewed three lease agreements for terms between three to four years expiring between 2023 and 2024. The total annual lease expense is approximately $6 thousand. The lease contracts do not contain any material residual value guarantees or material restrictive covenants. The remaining lease term for the operating leases is between 1.75-2.5 years with a discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.
(in thousands) Three months ended June 30, 2022 ($) | (in thousands) Three months ended June 30, 2021 ($) | |||||||
Operating lease costs | 37 | 37 | ||||||
Short term lease costs | 45 | 31 | ||||||
Variable lease costs | - | - | ||||||
Total lease costs | 82 | 68 | ||||||
| June 30, 2022, Form 10-Q
Right of use assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows:
(in thousands) | (in thousands) | |||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||
Assets | ||||||||
Operating lease asset | 419 | 450 | ||||||
Total lease assets | 419 | 450 | ||||||
Liabilities | ||||||||
Current liabilities: | ||||||||
Accrued liabilities and others (current portion – operating lease liability) | 126 | 123 | ||||||
Noncurrent liabilities: | ||||||||
Operating lease liability (non-current portion – operating lease liability) | 308 | 341 | ||||||
Total lease liability | 434 | 464 | ||||||
(in thousands) As of June 30, 2022 ($) | ||||
Supplemental cash flow and non-cash information related to leases is as follows: | ||||
Cash paid for amounts included in the measurement of lease liabilities | ||||
–Operating cash flows from operating leases | 26 | |||
Right-of-use assets obtained in exchange for operating lease obligations | 419 | |||
As of June 30, 2022, the following table summarizes the maturity of our lease liabilities: | ||||
June-23 | 149 | |||
June-24 | 149 | |||
June-25 | 133 | |||
June-26 | 87 | |||
June-27 | - | |||
Less: Present value discount | (84 | ) | ||
Total lease liabilities | 434 |
NOTE 10 – RELATED PARTY TRANSACTIONS ACCRUED AND OTHER LIABILITIES
(in thousands) | ||||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | |||||||
Compensation and other contributions | 765 | 1,054 | ||||||
Provision for expenses | 54 | 103 | ||||||
Other current liability | 381 | 300 | ||||||
Total | 1,200 | 1,457 | ||||||
| June 30, 2022, Form 10-Q
Compensation and other contribution related liabilities consist of accrued salaries to employees. Provision for expenses includes provision for legal, professional, and marketing expenses. Other current liability also includes $126 thousand and $123 thousand of the current operating lease liability and statutory payables of approximately $29 thousand and $55 thousand as of June 30, 2022, and March 31, 2017,2022, respectively.
NOTE 11 – LOANS AND OTHER LIABILITIES
Loan as of June 30, 2022:
On June 11, 2020, the Company has (i) a balance of $98,185 due and payable to our CEO inclusive of certain unpaid salaries from previous years and (ii) a secured loan at zero interest from spouse of our CEO in the amount of $244,412.
Other Liability:
(in thousands) | ||||||||
As of | ||||||||
June 30, 2022 ($) | March 31, 2022 ($) | |||||||
Statutory reserve | 16 | 16 | ||||||
Total | 16 | 16 | ||||||
The Company has an unsecured Note Payable to Bricoleur Partners, L.P.statutory reserve is a gratuity reserve for employees in the amount of $1,800,000 (“2012 Security”). Up to July 2014, the Company was making monthly payments of 17,100 shares of common stock. Starting on August 2014, the Company started making a monthly payment of 23,489 shares of common stock. Starting August 1, 2016, the Company started making a monthly payment of 30,000 shares. The Company has never made a cash interest payment to Bricoleur on the Note. The parties have agreed that the Company will make a payment (shown on our P&L under interest payment and not tax deductible to the Company) of 30,000 shares of common stock for each month the loan remains unpaid, regardless of the trading price of the stock. The arrangement allows the Company and Bricoleur to pursue permanent conversion of the principal to common stock, or repayment of the principal using common stock. At the 2017 annual meeting of the shareholders the Company asked the shareholders to vote on allowing the Company to deliver up to an additional 2 million shares of our common stock as repayment of principal. The vote on the amendment remains outstanding. During the quarter ended December 31, 2017, the Company issued a total of 90,000 shares valued at $48,000 to this debt holder, which constitutes non-tax-deductible payments for the Company.
NOTE 12 – COMMITMENTS AND CONTINGENCY
The Company may be involved in legal proceedings, claims, and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the condensed consolidated financial statements as of June 30, 2022, except as disclosed in legal proceedings section below.
In the U.S., we provide health insurance, life insurance, and a 401(k) plan wherein the Company matches up to 6% of Contents
NOTE 13 – COMMON STOCKSECURITIES
As of June 30, 2022, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001 per share, and 51,840,603 shares of common stock were issued and outstanding. The Company is also authorized to issue up to 1,000,000 shares of preferred stock, par value $0.0001 per share, and no preferred shares were issued and outstanding as of June 30, 2022.
Our common stock tradesis listed on the NYSE AMERICAN under the symbol “IGC” with CUSIP number 45408X308, $0.0001 par value (“Common Stock”)American (ticker symbol: IGC). This security is also available for tradingtrades on the Borse Frankfurt, Stuttgart, and Berlin Exchangesstock exchanges (ticker symbol: IGS1). The Common stock of the Company is also available for trading on the Borse Frankfurt, Borse Berlin, and Borse Stuttgart (XETRA2) exchanges in Germany. The Warrants and Units now trade on the OTC Markets. We have redeemable Warrants (CUSIP number 45408X118 expiring on March 6, 2019) to purchase Common Stock (ticker symbol: IGC.WT) and Units consisting ofhas 91,472 units outstanding that can be separated into common stock. Ten units may be separated into one share of Common Stock and two redeemable warrants to purchase Common Stock that are not listed.common stock. The Unitunit holders are requested to contact the Company or our transfer agent, Continental Stock Transfer and Trust, to getseparate their existing Units separatedunits into Common Stockcommon stock.
| June 30, 2022, Form 10-Q
On January 13, 2021, the Company entered into a Sales Agreement (the “Agreement”) with The Benchmark Company, LLC (the “Sales Agent”) pursuant to which the Sales Agent is acting as the Company’s sales agent with respect to the issuance and Warrants.
NOTE 14 – STOCK-BASED COMPENSATION
As of December 31, 2017,June 30, 2022, under both the Company’s previous 2008 and current 2018 Omnibus Plan, 4,374,899Incentive Plans, a total of 8,337,627 shares of common stock have been awarded.issued to employees, non-employees, and advisors. In addition, 6.9 million restricted share units (RSUs) fair valued at $6.9 million with a weighted average value of $1 per share, have been granted but not yet issued from different Incentive Plans and Grants. This includes 3.9 million RSUs granted to employees and directors, which consists of a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and market conditions, assuming continued employment either as an employee or director with the Company. The performance based RSUs are accounted upon certification by Management confirming the probability of achievement of milestones. As of DecemberJune 30, 2022, Management confirmed two of the milestones had been achieved and rest were considered probable to be achieved by March 31, 2017, there are 650,000 stock2027.
Additionally, options available to IGC’sheld by advisors and employees. Nodirectors to purchase 300 thousand shares of common stock underfair valued at $278 thousand with a weighted average of $0.93 per share have been granted but are to be exercised over a service period ending in Fiscal 2031. Options exercised before the 2008 ESOP planservice period are available for future grants ofexpensed when exercised.
The options or stock awards. In addition, inare valued using a Black-Scholes Pricing Model and Market based RSU are valued based on a lattice model, with the quarter ended December 31, 2017 the shareholders approved 1,900,000 shares of common stock for award, at the discretion of the Board, as a special grantfollowing assumptions:
Granted in Fiscal 2023 | Granted in Fiscal 2022 | |||||||
Expected life of options | 5 years | 5 years | ||||||
Vested options | 100 | % | 100 | % | ||||
Risk free interest rate | 2.64 | % | 2.42 | % | ||||
Expected volatility | 285 | % | 282 | % | ||||
Expected dividend yield | Nil | Nil | ||||||
The expense associated with share-based payments to employees, directors, advisors, and consultants. IGC granted 1,455,000 shares, out ofcontractors is allocated over the total approved byvesting or service period and recognized in the shareholders, to its directorsSelling, General and its employees with minimum vesting period of one year.
The expense associated with share-based payments to $322,891 foremployees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the Selling, General and Administrative expenses (including research and development). For the three months ended December 31, 2016.June 30, 2021, the Company’s share-based expense and option-based expense shown in Selling, generalGeneral and administrativeAdministrative expenses include compensation expenses to management, legal(including research and professional expenses, investor-relations expenses, acquisition related expensesdevelopment) was $120 thousand and travel expenses.$5 thousand, respectively.
Non-vested shares | Shares (in thousands) (#) | Weighted average grant date fair value ($) | ||||||
Non-vested shares as of March 31, 2022 | 5,283 | 1.17 | ||||||
Granted | 1,660 | 0.43 | ||||||
Vested | (1,022 | ) | (1.12 | ) | ||||
Cancelled/forfeited | - | - | ||||||
Non-vested shares as of June 30, 2022 | 5,921 | 0.98 | ||||||
| June 30, 2022, Form 10-Q
Options | Shares (in thousands) (#) | Weighted average grant date fair value ($) | Weighted average exercise price ($) | |||||||||
Options outstanding as of March 31, 2022 | 300 | 0.93 | 0.34 | |||||||||
Granted | - | - | - | |||||||||
Exercised | - | - | - | |||||||||
Cancelled/forfeited | - | - | - | |||||||||
Options outstanding as of June 30, 2022 | 300 | 0.93 | 0.34 | |||||||||
There was a combined unrecognized expense of $5 million related to non-vested shares and other income forshare options that the three-month periods ended December 31, 2017 and 2016 amountedCompany expects to $1,090 and $359,104, respectively, and included income received from the supply of skilled operators for the heavy equipment rental business and from the rent of the apartment belonging to TBL, which is in Kochi, India.
NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS
As of June 30, 2022, the denominator is increased to include the numberCompany’s marketable securities, if any, may consist of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive. Potential common stock consists of the incremental common stock issuable upon the exercise of common stock options and warrants (using the if-converted method). The computation of basic loss per share for the period ended December 31, 2017 excludes potentially dilutive securities of 1,815,667 shares underlying share purchase options and warrants
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2022, and March 31, 2022, and indicates the fair value hierarchy of the valuation allowance because of historical and expected losses. Astechniques the Company reverses its losses and becomes profitable, we will reassess the likelihood of recovering a portion or all of the deferred tax assets. used to determine such fair value:
(in thousands)
Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |||||||||||||
June 30, 2022 | ||||||||||||||||
Cash and cash equivalents: | 8,053 | - | - | 8,053 | ||||||||||||
Total cash and cash equivalents | 8,053 | - | - | 8,053 | ||||||||||||
Investments: | ||||||||||||||||
-Marketable securities | - | - | - | - | ||||||||||||
-Non-marketable securities | - | - | - | - | ||||||||||||
Total Investments | - | - | - | - | ||||||||||||
Level 1 ($) | Level 2 ($) | Level 3 ($) | Total ($) | |||||||||||||
March 31, 2022 | ||||||||||||||||
Cash and cash equivalents: | 10,460 | - | - | 10,460 | ||||||||||||
Total cash and cash equivalents | 10,460 | - | - | 10,460 | ||||||||||||
Investments: | ||||||||||||||||
-Marketable securities | - | - | - | - | ||||||||||||
-Non-marketable securities | - | - | - | - | ||||||||||||
Total investments | - | - | - | - | ||||||||||||
| June 30, 2022, Form 10-Q
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
Pharmaceutical Business | ||||||||||||||||
| Revenue | $ | - | $ | - | $ | - | $ | - | ||||||||
| Operating income/(Loss) | (422,706 | ) | (243,917 | ) | (957,870 | ) | (711,950 | ) | ||||||||
| Net Profit/(Loss) | (483,054 | ) | (285,592 | ) | (1,103,372 | ) | (838,774 | ) | ||||||||
| Legacy Business | ||||||||||||||||
| Revenue | $ | 762,009 | $ | 249,801 | $ | 1,050,582 | $ | 487,364 | ||||||||
| Operating income/(Loss) | (50,668 | ) | (142,195 | ) | (117,251 | ) | (607,339 | ) | ||||||||
| Net profit/(Loss) | (49,527 | ) | 174,031 | (107,619 | ) | (270,827 | ) | |||||||||
Three months ended December 31, | Nine months ended December 31, | |||||||||||||||
| 2017 | 2016 | 2017 | 2016 | |||||||||||||
| India | $ | 149,310 | $ | (15,886 | ) | $ | 382,580 | $ | 103,132 | |||||||
| Hong Kong | 585,884 | 213,117 | 585,884 | 213,117 | ||||||||||||
| Malaysia | 26,815 | 52,570 | 82,118 | 171,115 | ||||||||||||
| Total | $ | 762,009 | $ | 249,801 | $ | 1,050,582 | $ | 487,364 | ||||||||
| As of December, 30 | ||||||||
| 2017 | 2016 | |||||||
| India | $ | 5,771,338 | $ | 5,790,817 | ||||
| USA | 2,090,978 | 3,334,509 | ||||||
| Malaysia | 248,023 | 207,427 | ||||||
| Total | $ | 8,110,339 | $ | 9,332,753 | ||||
| Product & Service | Amount | % on total revenues | ||||||
| Trading | $ | 874,099 | 83 | % | ||||
| Real Estate | $ | 82,118 | 8 | % | ||||
| Rental | $ | 94,365 | 9 | % | ||||
| TOTAL | $ | 1,050,582 | 100 | % | ||||
NOTE 22 16 – FAIR VALUE OF FINANCIAL INSTRUMENTS SEGMENT INFORMATION
FASB ASC 280, “Segment Reporting” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group (“CODM”), in deciding how to allocate resources and in assessing performance. The CODM evaluates revenues and gross profits based on product lines and routes to market. Based on our integration and Management strategies, we operate in 2 reportable segments: (i) Infrastructure segment and (ii) Life Sciences segment.
The fair valueCompany’s CODM is the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. Therefore, and before our Life Sciences segment started, the Company determined that it operated in a single operating and reportable segment. As of the Company’s current assetsdate of this report and current liabilities approximate their carrying value becausein preparation for the new and different source of their short-term nature. Such financial instruments are classified as currentrevenue, the Company has determined that it operates in 2 operating and are expected to be liquidated within the next twelve months.
reportable segments: (a) Infrastructure segment and (b) Life Sciences segment. The Company does not include intercompany transfers between segments for Management reporting purposes.
The following provides information required by ASC 280-10-50-38 “Entity-wide Information”:
1) The table below shows revenue reported by segment:
Products and Services
(in thousands) | ||||||||
Segments | Three months ended June 30, 2022 ($) | Percentage of Total Revenue (%) | ||||||
Infrastructure segment | 10 | 5 | % | |||||
Life Sciences segment | 202 | 95 | % | |||||
Total | 212 | 100 | % | |||||
(in thousands) | ||||||||
Segments | Three months ended June 30, 2021 ($) | Percentage of Total Revenue (%) | ||||||
Infrastructure segment | 15 | 19 | % | |||||
Life Sciences segment | 62 | 81 | % | |||||
Total | 77 | 100 | % | |||||
For information for revenue by product and service, refer Note 2, “Summary of Significant Accounting Policies”.
| June 30, 2022, Form 10-Q
2) The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries. Revenue is generally attributed to the geographic location of customers:
(in thousands) | ||||||||||
Segments | Country | Three months ended June 30, 2022 ($) | Percentage of Total Revenue (%) | |||||||
Asia | India | 10 | 5 | % | ||||||
America | U.S. | 202 | 95 | % | ||||||
Total | 212 | 100 | % | |||||||
(in thousands) | ||||||||||
Segments | Country | Three months ended June 30, 2021 ($) | Percentage of Total Revenue (%) | |||||||
Asia | India | 17 | 22 | % | ||||||
America | U.S. | 60 | 78 | % | ||||||
Total | 77 | 100 | % | |||||||
3) The table below shows the non-current assets other than financial instruments held in the country of domicile and foreign countries.
(in thousands) | ||||||||||||
Nature of assets | USA (Country of Domicile) ($) | Foreign Countries (India, Hong Kong, and Colombia) ($) | Total as of June 30, 2022 ($) | |||||||||
Intangible assets, net | 937 | - | 937 | |||||||||
Property, plant, and equipment, net | 4,843 | 4,318 | 9,161 | |||||||||
Claims and advances | 550 | 372 | 922 | |||||||||
Operating lease asset | 372 | 47 | 419 | |||||||||
Total non-current assets | 6,702 | 4,737 | 11,439 | |||||||||
(in thousands) | ||||||||||||
Nature of assets | USA (Country of Domicile) ($) | Foreign Countries (India, Hong Kong, and Colombia) ($) | Total as of March 31, 2022 ($) | |||||||||
Intangible assets, net | 436 | 481 | 917 | |||||||||
Property, plant, and equipment, net | 4,978 | 4,441 | 9,419 | |||||||||
Non-marketable securities | - | - | - | |||||||||
Claims and advances | 550 | 387 | 937 | |||||||||
Operating lease asset | 396 | 54 | 450 | |||||||||
Total non-current assets | 6,360 | 5,363 | 11,723 | |||||||||
NOTE 17 – SUBSEQUENT EVENTS
None to report.
| June 30, 2022, Form 10-Q
Item 2. Management’sManagement’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussionpurpose of this Management’s Discussion and analysisAnalysis (“MD&A”) is to provide an understanding of ourthe Company’s consolidated financial condition and results of operations and cash flows, and should be read in conjunction with our unaudited condensed financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q for the three months ended June 30, 2022, and the Annual Report on Form 10-K for the fiscal year ended March 31, 2022 filed with the SEC on July 14, 2017. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. OurJune 23, 2022 (the “2022 Form 10-K”). The Company’s actual results could differ materially from those discussed in the forward-looking statements.here. Factors that could cause or contribute to these differences include those discussed in the “Forward-Looking Statements” and “Risk Factors” sections, as well as discussed elsewhere in this report. The risks and uncertainties can cause actual results to differ significantly from those in our Annual Reportforward-looking statements or implied in historical results and trends. We caution readers not to place undue reliance on Form 10-K filed withany forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as specifically required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions, or circumstances on July 14, 2017, includingwhich any such statements may be based, or that may affect the risk factorslikelihood that actual results will differ from those set out in Item 1A therein. Therefore, the financial statements included in this Report should be read in conjunction with the audited Consolidated Financial Statements containedforth in the Company’s Annual Report on Form 10-K filed with the SEC on July 14, 2017.forward-looking statements.
Overview
IGC has two linessegments: Life Sciences and Infrastructure.
Infrastructure Segment
The Infrastructure segment involves the execution of business. construction contracts and the rental of heavy construction equipment. Since our inception, the Company has operated its Infrastructure segment from India.
Life Sciences Segment
The firstLife Sciences segment involves our over the counter products (“OTC”) and our biopharmaceutical products.
Over the Counter Products: We have created a cannabinoid-based women’s wellness brand, Holief™ available through online channels and a CBD-caffeine-infused energy drink, Sunday Seltzer™, available through wholesale channels.
● | Holief™ is an all-natural, non-GMO, vegan, line of OTC products aimed at treating menstrual cramps (dysmenorrhea) and premenstrual symptoms (“PMS”). |
● | Sunday Seltzer™ is an all-natural, organic, carbonated energy drink with natural caffeine from green tea extract, CBD, vitamins B, vitamin C, no added sugars, and no preservatives. The energy drink is available in two flavors, pomegranate-lemon, and peach-ginger. In addition, Sunday Seltzer™ is also available in four flavors with CBD, vitamins B, vitamin C, and no caffeine. |
Both Holief™ and Sunday Seltzer™ are compliant with relevant federal, state, and local laws, and regulations.
Biopharmaceutical:
Since 2014, this part of our business has focused primarily on the potential uses of phytocannabinoids, including Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”), in combination with other compounds to treat multiple diseases, including Alzheimer’s. As a company engaged in the clinical-stage biopharmaceutical industry, we focus our research and development efforts, subject to results of future clinical trials, on seeking pharmaceutical solutions that may a) alleviate neuropsychiatric symptoms such as agitation, anxiety, and depression associated with dementia in Alzheimer’s disease; and b) halt the onset, progression, or cure Alzheimer’s disease. We currently have one investigational new drug candidate, “IGC-AD1”, in a Phase 2 clinical trial for agitation in dementia from Alzheimer’s. IGC-AD1 is a legacy infrastructure business,cannabis-based compound, which consistsis made up of heavy equipment rental, trading infrastructure related commodities, and real estate management.ultra-low doses of THC along with another compound as active ingredients. The second molecule, TGR-63, is a cannabis pharmaceutical businessan enzyme inhibitor that has developed a lead product, Hyalolex, for treating patients diagnosed withbeen shown, in pre-clinical trials, to reduce neurotoxicity in Alzheimer’s cell lines. Neurotoxicity causes cell dysfunction and death in Alzheimer’s disease. If shown to be efficacious in halting this process, this inhibitor has the potential to treat Alzheimer’s disease by ameliorating Aβ plaques.
| June 30, 2022, Form 10-Q
The Company recentlycompleted all dose escalation studies, and as announced that it is workingby the Company on using blockchain to address issues specific toDecember 2, 2021, the cannabis industry including transactional difficulties, product labeling, product identification assurance (PIA), and product origin assurance (POA).
Other Developments
Our pipeline of investigational and development cannabinoid formulations also includes pain creams and tinctures for pain relief. We believe that the biopharmaceutical component of our Life Sciences strategy will at least take several more years to mature and involves considerable risk; however, we also believe it may involve greater defensible growth potential and first-to-market advantage.
Although there can be no assurance, we believe this strategy has the potential to improve existing products and lead to the creation of new products, which, based on fourscientific study and research, may offer positive results for the management of certain conditions, symptoms, and side effects.
While the bulk of our medium and longer-term focus is on clinical trials and getting IGC-AD1 to be an FDA approved drug, our shorter-term strategy, is to use our resources to provide white label services and market Holief™ and Sunday Seltzer™. We believe this may provide us with several profit opportunities, although there can be no assurance of such profit opportunities.
Company Highlights
● | The Company has initiated a protocol titled “A Phase 2, Multi-Center, Double-Blind, Randomized, Placebo-controlled, trial of the safety and efficacy of IGC-AD1 on agitation in participants with dementia due to Alzheimer’s disease.” The protocol is powered at 146 Alzheimer’s patients with half receiving placebo and is a superiority, parallel group study. While subject to changes, we expect to conduct the trial at three sites, one in Canada and two in the U.S. The primary end point is agitation in dementia due to Alzheimer’s disease as rated by the Cohen-Mansfield Agitation Inventory (CMAI) over a six-week period. |
● | On June 7, 2022, the USPTO issued a patent (#11,351,152) to the Company titled “Method and Composition for Treating Seizures Disorders.” The patent relates to compositions and methods for treating multiple types of seizure disorders and epilepsy in humans and animals using a combination of the CBD with other compounds. Subject to further research and study, the combination is intended to reduce side effects caused by hydantoin anticonvulsant drugs such as phenobarbital, by reducing the dosing of anticonvulsant drugs in humans, dogs, and cats. |
● | On May 10, 2022, Hamsa Biopharma India Pvt. Ltd. (“Hamsa Biopharma”), a directly owned subsidiary of the Company, completed outstanding items in the agreement executed with the Jawaharlal Nehru Centre for Advanced Scientific Research (“JNCASR”). The agreement was signed on March 28, 2022, for exclusive global rights corresponding to certain molecules, technology, patent, and patent filings as discussed herein. |
Strategy
The Life Sciences segment strategy includes:
1. | Subject to FDA approval, developing IGC-AD1 as a drug for treating agitation in dementia due to Alzheimer’s and investigating and developing TGR 63 for the potential treatment of Alzheimer’s disease. |
2. | Marketing HoliefTM, Sunday SeltzerTM, and white label services. |
We believe developing a drug for either symptoms or as a disease modifying agent has considerable risk due to the need for multi-year trials and FDA approval. However, there is considerable upside and significant value creation to the extent we obtain first-to-market advantage, of which there can be no assurance. If we were to obtain first-to-market advantage, such advantage could result in significant growth if and when an approved drug launches. Our HoliefTM strategy includes expanding the line of products and developing online services that connect women with healthcare professionals who can help with PMS and dysmenorrhea. Building an online community that brings women together can create brand equity and loyalty.
| June 30, 2022, Form 10-Q
We believe that additional investment in clinical trials, R&D, facilities, marketing, advertising, and acquisition of complementary products and businesses will be critical to ongoing growth of the Life Sciences segment. These investments will fuel the development and delivery of innovative products that it is preparingdrive positive patient and customer experiences. We hope to leverage our R&D and intellectual property to develop ground-breaking, science-based products that are proven effective through clinical trials, subject to FDA approval. While there can be no assurance, we believe this strategy can improve our existing products and lead to the creation of new hemp-based products that can provide treatment options for pre-clinical trials: Natrinol is a natural substitute for Marinol, or synthetic THC. This product is aimed at relieving nausea, vomitingmultiple conditions, symptoms, and increasing appetite in patients with AIDSside effects.
Our Infrastructure segment strategy includes winning and Cancer. Caesafin uses combination therapy to alleviate seizures in dogs and cats. Serosapse addresses several end points in Parkinson’s disease including Rapid Eye Movement (REM) sleep disorder, anxiety, and dyskinesia. Hyalolex is aimed at reducing the buildup of plaques, tangles and relieve several other end symptomsexecuting competitively bid construction contracts, such as anxiety, sleep disorderbuilding roads, bridges, and agitationother civil works in patients diagnosed with Alzheimer’s disease. We expect to launch Hyalolex in select medical dispensaries in medical cannabis states in the U.S. in early 2018.Kerala, India.
COVID-19 Update
Our infrastructure business is based in India.the state of Kerala, India, which is among the Indian states most affected by COVID-19, and Hong Kong with strict quarantine and travel restrictions. The commodity tradingrestrictions continue to adversely impact our infrastructure business, is basedfinancial condition, liquidity, and operations. While IGC remains committed to its Infrastructure business line and intends to continue pursuing the execution of construction contracts, the purchase and resale of physical commodities used in infrastructure, and the rental of heavy construction equipment as the pandemic allows, we have limited visibility into when economic conditions will recover in India and Hong Kong. The real estate management business is based in Malaysia. This business is our main sources of revenue.
In each caseresponse, we have less than 1%oriented our current focus on a) the human trials on IGC-AD1 and getting an Alzheimer’s drug through trials and to market, subject to FDA approval; and b) launching a cannabinoid-based women’s wellness line of products designed to assist in managing PMS and Dysmenorrhea.
Results of Operations for the Three Months Ended
June 30, 2022, and June 30, 2021
The historical results presented below are not necessarily indicative of the market.
Statement of Operations (in thousands, unaudited)
Three months ended June 30, | ||||||||||||||||
2022 ($) | 2021 ($) | Change ($) | Percent Change | |||||||||||||
Revenue | 212 | 77 | 135 | 175 | % | |||||||||||
Cost of revenue | (70 | ) | (51 | ) | (19 | ) | 37 | % | ||||||||
Gross profit | 142 | 26 | 116 | 446 | % | |||||||||||
Selling, general and administrative expenses | (1,550 | ) | (1,776 | ) | 226 | (13 | )% | |||||||||
Research and development expenses | (1,394 | ) | (444 | ) | (950 | ) | 214 | % | ||||||||
Operating loss | (2,802 | ) | (2,194 | ) | (608 | ) | 28 | % | ||||||||
Impairment of investment | - | (37 | ) | 37 | (100 | )% | ||||||||||
Other income, net | 17 | 443 | (426 | ) | (96 | )% | ||||||||||
Loss before income taxes | (2,785 | ) | (1,788 | ) | (997 | ) | 56 | % | ||||||||
Income tax expense/benefit | - | - | - | - | ||||||||||||
Net loss | (2,785 | ) | (1,788 | ) | (997 | ) | 56 | % | ||||||||
Revenue – Revenue in the three months ended June 30, 2022, and June 30, 2021, was primarily derived from our Life Sciences segment, which involved sales of products such as compared to $249,801lotion, gummies, and alcohol-based hand sanitizers, among others. Revenue was approximately $212 thousand and $77 thousand for the three months ended December 31, 2016. In the three-month period ended December 31, 2016, the revenue consisted of trading, real estate management,June 30, 2022, and rental of heavy equipment.June 30, 2021, respectively. The increase inInfrastructure segment had lower revenue during the same period in 2017 isthree months ended June 30, 2022 due to the slower recovery from an increase in the volumeCOVID-19 pandemic, the ensuing disruption, and underlining commodity involved in the trading. In December 2016 mostonset of the monsoon season in India, which hampers construction activity. We anticipate lower revenue came from trading electronics and in 2017 from trading commodities related to infrastructure.the Infrastructure segment for the foreseeable future.
| June 30, 2022, Form 10-Q
Cost of Revenue (excluding depreciation) revenue– Cost of revenue amounted to approximately $70 thousand for the three months ended December 31, 2017 was $723,062 asJune 30, 2022, compared to $121,829$51 thousand in the three months ended June 30, 2021. The cost of revenue in the three months ended June 30, 2022, is primarily attributable to raw materials that are required to produce our products. Our gross margin increased from 34% to 67%, which reflects our increased sales from higher-margin Life Sciences segment as opposed to the lower margin infrastructure segment, which has traditionally been a lower margin business.
Selling, general and administrative expenses (“SG&A”) – SG&A expenses consist primarily of employee-related expenses, sales commission, professional fees, legal fees, marketing, other corporate expenses, allocated general overhead and provisions, depreciation and write-offs relating to doubtful accounts and advances, if any. SG&A expenses decreased by approximately $226 thousand or 13% to approximately $1.5 million for the three months ended December 31, 2016. The increase in cost of revenue stemsJune 30, 2022, from an increase in the volume of business as reflected in the revenue and is related to trading and real estate and rental business.
Research and Development expenses – R&D expenses were attributed to our Life Sciences segment. The R&D expenses increased by approximately $950 thousand or 214% to $1.4 million during the three months ended June 30, 2022, from approximately $444 thousand during three month ended June 30, 2021. The increase is primarily attributable to the progression of Phase 2 trials on IGC-AD1 and pre-clinical studies on TGR-63. We anticipate additional increases to R&D expenses as comparedthe Phase 2 trial commences with patient sign ups.
Other income, net – Other net income decreased by approximately $426 thousand or 96% during the three months ended June 30, 2022. The total other income for the three months ended December 31, 2016. MostJune 30, 2022, and 2021, is approximately $17 thousand and $443 thousand, respectively. During the three months ended June 30, 2021, the other income included one time income of approximately $430 thousand related to forgiveness of PPP Note. Other income includes interest income and rental income, dividend income, and unrealized gains from marketable securities, net, and income from sale of scrap, among others.
Liquidity and Capital Resources
Our sources of liquidity are cash and cash equivalents, funds raised through the ATM offering, cash flows from operations, short-term and long-term borrowings, and short-term liquidity arrangements. The Company continues to evaluate various financing sources and options to raise working capital to help fund current research and development programs and operations. The Company does not have any material long-term debt, capital lease obligations or other long-term liabilities, except as disclosed in this report. Please refer to Note 12, “Commitments and contingencies”, Note 11, “Loans and Other Liabilities” and Note 9, “Leases” in Item 1 of this report for further information on Company commitments and contractual obligations.
While the Company believes its existing balances of cash, cash equivalents and marketable securities, and other short-term liquidity arrangements will be sufficient to satisfy its working capital needs, capital asset purchases, debt repayments, investments, including but not limited to, mutual funds, treasury bonds, cryptocurrencies, and other asset classes, clinical trials and other liquidity requirements, if any, associated with its existing operations over the next 12 months, it will raise money as and when it is able to do so. The Company continues to utilize the ATM to raise capital. Management is actively monitoring the impact of COVID-19 on the Company’s financial condition, liquidity, operations, suppliers, industry, legal expenses, are public-companyand workforce.
Please refer to Item 1A. “Risk Factors” for further information on the risks related expenses, including legal fees.to the Company.
(in thousands, unaudited) | ||||||||||||||||
As of June 30, 2022 ($) | As of March 31, 2022 ($) | Change | Percent Change | |||||||||||||
Cash and cash equivalents | 8,053 | 10,460 | (2,407 | ) | (23 | )% | ||||||||||
Working capital | 11,068 | 12,670 | (1,602 | ) | (13 | )% | ||||||||||
| June 30, 2022, Form 10-Q
Cash and cash equivalents
Cash and cash equivalents decreased by approximately $4,989$2.4 million to $8 million in the three months ended DecemberJune 30, 2022, from $10.4 million as of March 31, 2017 as compared2022, a decrease of approximately 23%.
The major decrease was due to $196,103approximately $158 thousand in the three months ended December 31, 2016. The decreasepurchase of property, plant, and equipment and acquisition of intangible assets and approximately $2.2 million of net cash loss.
Summary of Cash flows
(in thousands, unaudited) | ||||||||||||||||
Three months ended June 30, | ||||||||||||||||
2022 | 2021 | Change | Percent Change | |||||||||||||
Cash used in operating activities | (2,196 | ) | (1,851 | ) | (345 | ) | 19 | % | ||||||||
Cash used in investing activities | (158 | ) | (95 | ) | (62 | ) | 65 | % | ||||||||
Cash (used in)/provided by financing activities | (1 | ) | 726 | (727 | ) | (100 | )% | |||||||||
Effects of exchange rate changes on cash and cash equivalents | (52 | ) | (9 | ) | (44 | ) | 505 | % | ||||||||
Net decrease in cash and cash equivalents | (2,407 | ) | (1,229 | ) | (1,178 | ) | 96 | % | ||||||||
Cash and cash equivalents at the beginning of period | 10,460 | 14,548 | (4,088 | ) | (28 | )% | ||||||||||
Cash and cash equivalents at the end of the period | 8,053 | 13,319 | (5,266 | ) | (40 | )% | ||||||||||
Operating Activities
Net cash used in depreciation is from the curtailment of the iron-ore mining business in China.
Net cash used in operating activities for the three months ended December 31, 2016. MostJune 30, 2021, was approximately $1.9 million. It consists of the interest is paid with common shares of the Company and is therefore non-cash.
Investing Activities
Net cash used in investing activities for the three months ended December 31, 2016. June 30, 2022, was approximately $158 thousand, which comprised of expenses of approximately $31 thousand for the acquisition and filing expenses related to patents and purchase of property, plant, and equipment of approximately $127 thousand.
Net cash used in investing activities for the three months ended June 30, 2021, was approximately $95 thousand, which comprised of expenses of approximately $2 thousand for the acquisition and filing expenses related to patents and purchase of property, plant, and equipment of approximately $93 thousand.
Financing Activities
Net cash used by financing activities was approximately $1 thousand for the three months ended June 30, 2022, which is comprised of re-payment of loan.
Net cash provided by financing activities was approximately $726 thousand for the three months ended June 30, 2021, which is comprised of net proceeds from issuance of equity stock through ATM offering, net of all expenses related to issuance of stock.
| June 30, 2022, Form 10-Q
Off-Balance Sheet Arrangements
We do not have any undisclosed investmentsoutstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign currency forward contracts. Furthermore, we do not have any retained or contingent interest in special purpose entitiesassets transferred to an unconsolidated entity that serves as credit, liquidity, or undisclosed borrowingsmarket risk support to such entity. We do not have any variable interest in an unconsolidated entity that provides financing, liquidity, market risk or debt.
Critical Accounting Policies
While all accounting policies impact the financial statements, certain policies may be viewed as critical. Critical accounting policies are those that are both most important to the portrayal of financial condition and results of operations and that require management’sManagement’s most subjective or complex judgments and estimates. Our managementManagement believes the policies that fall within this category are the policies on revenue recognition, accounting forinventory, accounts receivable, foreign currency translation, impairment of long-lived assets and investments, stock-based compensation, goodwill, and income taxes.
Please see our disclosures onin Note 2 -– Summary of Significant Accounting Policies ofto the Notes to the unauditedUnaudited Condensed Consolidated Financial Statements in this report, in the Notes to the Audited Consolidated Financial Statements in the 2021 Form 10-K, as well as Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2021 Form 10-K, for a discussion of all our critical and significant accounting policies.
Recent Accounting Pronouncements
Changes to U.S. GAAP are established by the Financial Accounting Standards Board (FASB) in the form of accounting standards updates (ASUs) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Newly issued ASUs not listed are expected to have no impact on the Company’s consolidated financial position and results of operations, because either the ASU is not applicable, or the impact is expected to be immaterial. Recent accounting pronouncements which may be applicable to us are described in Note 2, “Significant Accounting Policies” to the Notes to the Unaudited Condensed Consolidated Financial Statements in this report and Note 2 - Significant Accounting Policies ofin the Notes to the auditedAudited Consolidated Financial Statements in Part II of our Annual Report on2022 Form 10-K, filed with the SEC on July 14, 2017 for a discussion10-K.
| June 30, 2022, Form 10-Q
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Item 3 does not apply to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it isus because we are a “smallersmaller reporting company.”
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our Management maintains disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to Management, including our Chief Executive Officer and Principal Financial Officer (our principal executive officer and principal financial officer, respectively), as appropriate, to allow for timely decisions regarding required disclosure.
Our Management, including the Chief Executive Officer and Principal Financial Officer, carried out an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, management conducted anreport. Based on this evaluation, under the supervision and with the participation of itsour Chief Executive Officer (CEO) and its principal financial and accounting officer (PFAO), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934. Based upon that evaluation, our CEO and PFAOPrincipal Financial Officer concluded that our disclosure controls and procedures arewere effective to ensure that the information required to be disclosed in the reports filed or submitted by the Company in reportsus under the Exchange Act iswas recorded, processed, summarized and reported within the requisite time periods specified in the SEC rules and forms; andthat such information was accumulated and communicated to the Company’s management,our Management, including its principal executive officerour Chief Executive Officer and principal financial officer,Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
Our Management, including our Chief Executive Officer and Principal Financial Officer, evaluated our “internal control over financial reporting” as defined in Exchange Act Rule 13a-15(f) to determine whether any changes in our internal control over financial reporting occurred during the three months ended June 30, 2022, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there were no changes in our internal controlscontrol over financial reporting during our fiscal quarterthe three months ended December 31, 2017 which were identified in conjunction with Management’s evaluation required by paragraph (d) of Rule 13a-15 and 15d-15 under the Exchange ActJune 30, 2022, that have materially affected or are reasonably likely to materially affect our internal controlscontrol over financial reporting.
| June 30, 2022, Form 10-Q
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
The Company may be involved in legal proceedings, claims, and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.
As of June 30, 2022, the Company and one of its officers are parties to the following litigation matter:
Apogee Financial Investments, Inc., et al. v. India Globalization Capital, Inc., et al., Civil Action No. 1:21-cv-03809 (U.S. District Court for the Southern District of New York). On April 29, 2021, Apogee Financial Investments, Inc. (“Apogee”) and John R. Clarke (“Clarke”) filed a complaint against the Company and IGC’s President and Chief Executive Officer, Ram Mukunda (“Mukunda”) (the “Apogee Litigation”). The litigation was originally initiated by IGC on February 8, 2021 (India Globalization Capital, Inc. v. Apogee Financial Investments, Inc., Civil Action No. 1:21-cv-01131, U.S. District Court for the Southern District of New York), wherein IGC alleged that Apogee breached a purchase agreement dated December 18, 2014, related to IGC’s intended purchase of a business known as Midtown Partners and Co., LLC (“Midtown”). In response to the original lawsuit filed by IGC, Apogee and Clarke filed a counterclaim as well as the Apogee Litigation. On June 28, 2021, Apogee and Clarke filed an amended complaint. On July 23, 2021, IGC and Mukunda moved to partially dismiss the counterclaim and the Apogee Litigation. On March 7, 2022, the Court granted the motion to dismiss in substantial part, leaving only two claims: Apogee’s cross-claim against the Company for alleged breach of the purchase agreement; and Clarke’s claim against the Company for alleged breach of an alleged promise to issue him shares of the Company. The Company considers the counterclaim and the Apogee Litigation to be ordinary, routine litigation incidental to the business. The Company and Mukunda deny any and all liability and, in particular, deny many of the factual allegations contained in the Apogee Litigation. Both the Company and Mukunda intend to vigorously defend the litigation and are represented by counsel for that purpose.
Item 1A. Risk Factors
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information under this item.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.
| June 30, 2022, Form 10-Q
Item 6
Exhibit | |
Number | Exhibit Description |
3.1 | |
3.2 | |
3.3 | |
10.01 | |
31.1* | |
31.2* | Rule 13a-14(a) / 15d-14(a) Certification of Principal |
32.1** | |
101.INS* | Inline XBRL Instance Document. |
101.SCH* | |
Inline XBRL Taxonomy Extension Schema | |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase |
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
*Filed herewith.
** Furnished herewith.
| June 30, 2022, Form 10-Q
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
INDIA GLOBALIZATION CAPITAL, INC. | |||
Date: | By: | /s/ Ram Mukunda | |
Ram Mukunda | |||
President and Chief Executive Officer (Principal Executive Officer) | |||
Date: August 5, 2022 | By: | /s/ Claudia Grimaldi | |
Claudia Grimaldi | |||
Vice President (Principal Financial Officer) | |||
| June 30, 2022, Form 10-Q