igc20240630_10q.htm

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 June 30, 2024

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission file number: 001-32830

IGC PHARMA, 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		Trading symbol(s)		Name of each exchange on which registered
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. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☑ Yes ☐ No

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

75,636,419 shares of our common stock were outstanding as of August 5, 2024.

| June 30, 2024, Form 10-Q

IGC PHARMA, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2024

Table of Contents

		Page
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Changes in Shareholder’s Equity	6
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	27

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28
Item 3.	Defaults Upon Senior Securities	28
Item 4.	Mine Safety Disclosures	28
Item 5.	Other Information	28
Item 6.	Exhibits	29

SIGNATURES		30

| June 30, 2024, 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,” “hope,” “potential,” “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 with the sale of our products and services. The Company may not be able to complete human trials on our investigational drug candidates, or, once conducted, the results of human trials may not be favorable or as anticipated or may reflect a lack of efficacy in humans or animals. Precautions, including social distancing and travel restrictions, among others 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, 2024, filed with the Securities and Exchange Commission (“SEC”) on June 24, 2024 and other documents that we subsequently file with the SEC that update, supplement or supersede such information, which 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, 2024, Form 10-Q

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

IGC Pharma, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

(Unaudited)

	June 30, 2024 ($)			March 31, 2024 ($)
ASSETS
Current assets:
Cash and cash equivalents		1,824			1,198
Accounts receivable, net		28			39
Inventory		1,510			1,540
Asset held for sale		720			720
Deposits and advances		325			208
Total current assets		4,407			3,705

Non-current assets:
Intangible assets, net		1,720			1,616
Property, plant, and equipment, net		3,586			3,695
Claims and advances		688			688
Operating lease asset		193			198
Total non-current assets		6,187			6,197
Total assets		10,594			9,902
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		771			773
Accrued liabilities and others		1,718			1,567
Total current liabilities		2,489			2,340

Non-current liabilities:
Long-term loans		136			137
Other liabilities		20			20
Operating lease liability		69			84
Total non-current liabilities		225			241
Total liabilities		2,714			2,581

Commitments and Contingencies – See Note 12

Stockholders’ equity:
Preferred stock, $0.0001 par value: authorized 1,000,000 shares, no shares issued or outstanding as of June 30, 2024, and March 31, 2024.
Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 75,636,419 and 66,691,195 shares issued and outstanding as of June 30, 2024, and March 31, 2024, respectively.		127,349			124,409
Accumulated other comprehensive loss		(3,426	)		(3,423	)
Accumulated deficit		(116,043	)		(113,665	)
Total stockholders’ equity		7,880			7,321
Total liabilities and stockholders’ equity		10,594			9,902

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

| June 30, 2024, Form 10-Q

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IGC Pharma, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except loss per share and share data)

(Unaudited)

	Three months ended June 30,
	2024 ($)			2023 ($)
Revenue		272			555
Cost of revenue		(109	)		(300	)
Gross profit		163			255
Selling, general and administrative expenses		(1,670	)		(1,647	)
Research and development expenses		(889	)		(747	)
Operating loss		(2,396	)		(2,139	)
Other income, net		18			64
Loss before income taxes		(2,378	)		(2,075	)
Income tax expense/benefit		-			-
Net loss attributable to common stockholders		(2,378	)		(2,075	)
Foreign currency translation adjustments		(3	)		9
Comprehensive loss		(2,381	)		(2,066	)

Loss per share attributable to common stockholders:
Basic and diluted	$	(0.03	)	$	(0.04	)
Weighted-average number of shares used in computing loss per share amounts:		72,813,538			53,077,436

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

| June 30, 2024, Form 10-Q

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IGC Pharma, 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, 2023		53,077		118,965		(100,665	)		(3,389	)		14,911
Common stock-based compensation & expenses, net		-		357		-			-			357
Issuance of common stock through offering (net of expenses)		-		-		-			-			-
Cancellation/forfeiture of shares		-		-		-			-			-
Common stock subscribed		-		-		-			-			-
Net loss		-		-		(2,075	)		-			(2,075	)
Foreign currency translation		-		-		-			9			9
Balances as of June 30, 2023		53,077		119,322		(102,740	)		(3,380	)		13,202


Balances as of March 31, 2024		66,691		124,409		(113,665	)		(3,423	)		7,321
Common stock-based compensation & expenses, net		-		433		-			-			433
Issuance of common stock through offering (net of expenses)		8,945		2,507		-			-			2,507
Cancellation/forfeiture of shares		-		-		-			-			-
Common stock subscribed		-		-		-			-			-
Net loss		-		-		(2,378	)		-			(2,378	)
Foreign currency translation		-		-		-			(3	)		(3	)
Balances as of June 30, 2024		75,636		127,349		(116,043	)		(3,426	)		7,880

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

| June 30, 2024, Form 10-Q

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IGC Pharma, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Three months Ended June 30,
	2024 ($)			2023 ($)
Cash flows from operating activities:
Net loss		(2,378	)		(2,075	)
Adjustment to reconcile net loss to net cash:
Depreciation and amortization		162			155
Common stock-based compensation and expenses, net		402			357
Other non-cash items		-			(53	)

Changes in:
Accounts receivables, net		11			(118	)
Inventory		30			10
Deposits and advances		(118	)		33
Claims and advances		-			(13	)
Accounts payable		(2	)		142
Accrued and other liabilities		151			91
Operating lease asset		5			31
Operating lease liability		(15	)		(28	)
Net cash used in operating activities		(1,752	)		(1,468	)

Cash flow from investing activities:
Purchase of property, plant, and equipment		(38	)		(20	)
Sale of property, plant, and equipment		-			43
Acquisition and development of intangible assets		(93	)		(28	)
Net cash used in investing activities		(131	)		(5	)

Cash flows from financing activities:
Net proceeds from the issuance of common stock		2,508			-
Repayment of long-term loan		(1	)		(1	)
Net cash provided by (used in) financing activities		2,507			(1	)

Effects of exchange rate changes on cash and cash equivalents		2			1
Net increase (decrease) in cash and cash equivalents		626			(1,473	)
Cash and cash equivalents at the beginning of the period		1,198			3,196
Cash and cash equivalents at the end of the period		1,824			1,723

Supplementary information:
Non-cash items:
Common stock issued/granted for stock-based compensation, including patent acquisition		433			357

The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.

| June 30, 2024, Form 10-Q

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IGC Pharma, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 2024

(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 IGC Pharma, 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 Pharma, a clinical-stage company developing treatments for Alzheimer’s disease, is committed to transforming patient care by striving to offer faster-acting and more effective solutions. Our leading drug candidate, IGC-AD1, embodies this vision by tackling a critical challenge – managing agitation in Alzheimer’s dementia. Early results from our Phase 2 trial are promising: IGC-AD1 effectively reduced agitation in patients compared to a placebo, and crucially, it did so much faster than traditional medications. While existing anti-psychotics can take a long 6 to 12 weeks to show effects, IGC-AD1 has the potential to act within two weeks. This significantly faster onset of action could significantly improve patient care and represents a potential breakthrough in managing Alzheimer’s-related agitation, although there can be no assurance thereof.

We currently have five platforms, each with a core molecule that can be modified. For example, the TGR family consists of many molecules, such as TGR-60, TGR-61, and TGR-63. TGR-63 targets plaques in Alzheimer’s. Similarly, the IGC-C and IGC-M platforms consist of many molecules. The Alzheimer’s targeting molecule from each of our platforms is set forth below:

● IGC-AD1: Our lead investigational drug tackles agitation, a major burden for patients and caregivers. By addressing neuroinflammation, it has the potential to offer a faster-acting solution compared to traditional medications.

● TGR-63: Through pre-clinical studies, TGR-63 has demonstrated its potential to disrupt the progression of Alzheimer’s by targeting Aβ plaques, a key disease hallmark.

● IGC-1C: At the preclinical stage, IGC-1C represents a potential breakthrough by targeting tau protein and neurofibrillary tangles, aiming to modify the disease course.

● IGC-M3: Also in preclinical development, IGC-M3 focuses on early intervention by inhibiting Aβ plaque formation, potentially slowing cognitive decline.

● LMP: In preclinical development, LMP is designed to target multiple hallmarks of Alzheimer’s disease, including Aβ plaques and neurofibrillary tangles, for a comprehensive therapeutic effect.

We are also developing Artificial Intelligence (“AI”) models for predicting early Alzheimer’s detection biomarkers, optimizing clinical trials, and to help us explore new disease applications for our molecules. For example, our AI models are being developed to predict the probability that our molecules can work on other receptors, such as GLP1 (neurological disorders, weight loss), CB1 (neuropsychiatric conditions), among others. Additionally, our 26 patent filings, including for IGC-AD1, demonstrate our commitment to innovation and protecting our intellectual property. Collectively, these core assets and initiatives underscore our commitment to advancing the field of pharmaceuticals, delivering groundbreaking treatments, and creating lasting value for our investors. We remain steadfast in our pursuit of excellence and our mission to improve the lives of those affected by Alzheimer’s and related conditions.

IGC is a Maryland corporation established in 2005 with a fiscal year ending on March 31, spanning a 52- or 53-week period. IGC has two business segments: Life Sciences Segment and Infrastructure Segment. For more information on the business segments, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”.

| June 30, 2024, Form 10-Q

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Update:

Phase 2 Clinical Trial

IGC Pharma launched a Phase 2 trial with 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” (clinicaltrials.gov, Identifier: CT05543681). The study is powered to include 146 Alzheimer’s patients; as a superiority trial with parallel groups; half of the participants will receive a placebo, and the other half will receive IGC-AD1.

The primary and secondary endpoints are the mean change in agitation scores from baseline, compared to placebo, as assessed by the Cohen-Mansfield Agitation Inventory (“CMAI”) in Alzheimer’s patients after 6 weeks of treatment and the mean change in CMAI scores after 2 weeks of treatment, respectively. Agitation is rated at the trial site, at baseline, week 2, and week 6, by a trained practitioner using the CMAI, a scale designed and widely used to measure agitation in Alzheimer’s dementia (“AAD”) in clinical trials. The IGC-AD1 Phase 2 is an ongoing clinical trial that continues to enroll. IGC-AD1 is an oral liquid formulation administered twice daily (“bid”) for six weeks with no placebo run-in and titration to full dose over two days. To date over 1,000 oral doses have been administered, with no dose-limiting adverse events observed, highlighting the safety profile of IGC-AD1. The investigational product potentially targets different pathways implicated in agitation in Alzheimer’s dementia (“AAD”), including CB1 receptor dysfunction, neuroinflammation, and neurotransmitter imbalance.

AI / Machine Learning (“ML”)

In our pursuit of innovation, we leverage AI and ML. AI refers to the development of intelligent systems that can learn and act autonomously. ML is a branch of AI that allows computers to learn from data without the need for explicit programming. This technology plays a vital role in our efforts and could allow companies our size to do what previously was the domain of much larger pharmaceutical companies. For instance, we are utilizing ML by training transformers, a powerful neural network architecture, to analyze vast datasets from our Phase 1 and unblinded Phase 2 interim clinical trial to identify patterns and optimize the clinical trial protocol for a potential Phase 3 trial. The AI model, for example, can tell us if a particular neuropsychiatric scale that we used in Phase 1 and Phase 2 added valuable information to the trial, and if it did not, we could remove that scale from a future Phase 3 trial, thus saving money and time in the overall trial management. In the long term, with more data, the trained AI model could allow us to consider incoming patient signatures and predict outcomes for our drug, including adverse effects, thus personalizing the delivery of IGC-AD1.

Additionally, we are developing AI models that help us explore potential applications of molecules from our platforms beyond their initial Alzheimer’s targets; we know that TGR-63 and IGC-M3 target plaques in Alzheimer’s, however, AI models could help us consider applications of TGR-60, TGR-61, IGC-M1, IGC-M2, and many others. For example, we are investigating whether our molecules might interact with other receptors, like GLP-1. GLP-1 is a receptor linked to regulating blood sugar and is increasingly being studied for its potential role in neurological disorders, in addition to its established role in weight management. A successful link between our molecules and other targets potentially expands our opportunities, as some of these other markets, such as the weight loss market, are considerably larger than the Alzheimer’s market. These applications could potentially lead, if proven in future clinical trials, to new treatment avenues and broader market reach for our molecules. This analysis also potentially allows us to prioritize work on our molecules and optimize our resources.

Business Organization

As of June 30, 2024, the Company had the following operating subsidiaries: IGCare LLC, HH Processors, LLC, IGC Pharma, LLC, IGC Pharma IP, LLC, SAN Holdings, LLC, Sunday Seltzer, LLC, Hamsa Biopharma India Pvt. Ltd., Techni Bharathi Private Limited (TBL), and Colombia-based beneficially-owned subsidiary IGC Pharma SAS. The Company’s fiscal year is the 52- or 53-week period that ends on March 31. The Company’s principal office is in Maryland, established in 2005. Additionally, the Company has offices in Washington state, Colombia, South America, and India. The Company’s filings are available on www.sec.gov.

| June 30, 2024, Form 10-Q

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NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The accompanying condensed consolidated Balance Sheet as of June 30, 2024, and March 31, 2024, condensed consolidated statements of operations for the three months ended June 30, 2024, and 2023, and condensed consolidated statements of cash flows for the three months ended June 30, 2024, and 2023, are unaudited. The consolidated balance sheet as of March 31, 2024, has been derived from audited financial statements, and the accompanying as of June 30, 2024 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 audited consolidated financial statements for the fiscal year ended March 31, 2024 (“Fiscal 2024”) contained in the Company’s Form 10-K for Fiscal 2024, filed with the SEC on June 24, 2024, specifically in Note 2 to the consolidated financial statements.

Principles of consolidation

The interim statements include the consolidated accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated. In the opinion of the Company’s management, the interim statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. Transactions between the Company and its subsidiaries are eliminated in the consolidated financial statements.

Presentation and functional currencies

The Company operates in the U.S., Colombia, and India and a portion of the Company’s financials are denominated in the Indian Rupee (“INR”), or the Colombian Peso (“COP”). As a result, changes in the relative values of the U.S. Dollar (“USD”), the INR, or the COP affect our financial statements.

The accompanying financial statements are reported in USD. INR and COP are the functional currencies for certain subsidiaries of the Company. The translation of the functional currencies into USD is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues 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 (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.

Going Concern

The Company assesses and determines its ability to continue as a going concern in accordance with the provisions of ASC Subtopic 205-40, “Presentation of Financial Statements—Going Concern”, which requires the Company to evaluate whether there are conditions or events that raise substantial doubt about its ability to continue as a going concern.

The Company is currently in a clinical trial stage and, thus, has not yet achieved profitability. The Company expects to continue to incur significant operating and net losses and negative cash flows from operations in the near future.

The Company estimates that its current cash and cash equivalents balance with the working capital and equity investment is sufficient to support operations beyond the twelve months following the date these consolidated financial statements and footnotes were issued. These estimates are based on assumptions that may prove to be wrong, and the Company could use its available capital resources sooner than it currently expects.

| June 30, 2024, Form 10-Q

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Accounts receivable

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 may be required. We had $28 thousand of accounts receivable, net of provision for the doubtful debt of $24 thousand as of June 30, 2024, as compared to $39 thousand of accounts receivable, net of provision for the doubtful debt of $24 thousand as of March 31, 2024.

Loss per share

The computation of basic loss per share for the three months ended June 30, 2024, excludes potentially dilutive securities of approximately 11 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 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, 2024, and 2023, used for the computation of basic earnings per share (“EPS”) is 72,813,538 and 53,077,436, respectively. Due to the loss incurred by the Company during the three months ended June 30, 2024, and 2023, 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 to safeguard against hackers, however, there can be no assurance thereof. During the three months ended June 30, 2024, there were no impactful breaches in cybersecurity.

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.

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 segment is recognized for the renting business when the equipment is rented, and the terms of the agreement have been fulfilled during the period. Revenue from the execution of infrastructure contracts is recognized based on the output method as and when part of the performance obligation has been completed, and approval from the contracting agency has been obtained after 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 white label services is recognized when the performance obligation has been completed, and output material has been transferred to the customer.

| June 30, 2024, Form 10-Q

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Net sales disaggregated by significant products and services for the three months ended June 30, 2024, and 2023 are as follows:

	*(in thousands)* Three months ended June 30,
	2024 ($)		2023 ($)
Infrastructure segment ⁽¹⁾		-		167

Life Sciences segment
Wellness and lifestyle ⁽²⁾		21		44
White labeling services ⁽³⁾		251		344
Total		272		555

(1) Infrastructure segment consists of income from the rental of heavy construction equipment and construction contracts.

(2) Revenue from wellness and lifestyle consists of the sale of products such as gummies, hand sanitizers, bath bombs, lotions, hemp crude extract, hemp isolate, and hemp distillate.

(3) Revenue from white label services consists of rebranding our formulations or the customer’s products as per the customer’s requirement.

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 ASC. 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.

NOTE 3 – INVENTORY

	*(in thousands)*
	As of June 30, 2024 ($)		As of March 31, 2024 ($)
Raw materials		1,077		1,099
Work-in-Progress		36		-
Finished goods		397		441
Total		1,510		1,540

During the three months ended June 30, 2024, and 2023, the Company wrote off approximately $26 and $20 thousand of inventory due to abnormal loss due to the product expiration, idle facility expense, freight, handling costs, scrap, and wasted material (spoilage). This charge was recorded in Selling, general, and administrative Expenses.

We capitalize inventory costs related to our investigational drug, provided that management determines there is a potential alternative use for the inventory in future research and development projects or other purposes. As of June 30, 2024, and March 31, 2024, our consolidated balance sheet reported approximately $392 thousand clinical trial-related inventory, respectively.

NOTE 4 – DEPOSITS AND ADVANCES

	*(in thousands)*
	As of June 30, 2024 ($)		As of March 31, 2024 ($)
Advances to suppliers and consultants		34		41
Other receivables and deposits		51		52
Prepaid expenses and other current assets		240		115
Total		325		208

| June 30, 2024, Form 10-Q

Table of Contents

The Advances to suppliers and consultants primarily relate to advances to vendors. Prepaid expenses and other current assets include approximately $34 thousand statutory advances as of June 30, 2024, and approximately $39 thousand as of March 31, 2024, respectively.

NOTE 5 – INTANGIBLE ASSETS

	*(in thousands)*
	As of June 30, 2024 ($)			As of March 31, 2024 ($)
*Amortized intangible assets*
Patents		837			836
Other intangibles		34			34
Accumulated amortization		(199	)		(181	)
Total amortized intangible assets		672			689

*Other intangible assets*
Patents		526			521
Software development cost		522			406
Total unamortized intangible assets		1,048			927
Total intangible assets		1,720			1,616

The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing various patent applications in different countries along with granted 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, 2024, and 2023, amounted to approximately $20 thousand and $18 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, 2024, there was no impairment.

Estimated annual amortization expense	*(in thousands)* *($)*
For the year ended 2026		88
For the year ended 2027		97
For the year ended 2028		106
For the year ended 2029		117
For the year ended 2030		129

NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT

	*(in thousands, except useful life)*
	Useful Life (years)	As of June 30, 2024 ($)			As of March 31, 2024 ($)
Land	N/A		-			-
Buildings and facilities	25		2,305			2,303
Plant and machinery	5-20		3,368			3,334
Computer equipment	3		166			166
Office equipment	3-5		136			140
Furniture and fixtures	5		92			93
Vehicles	5		101			101
Total gross value			6,168			6,137
Less: Accumulated depreciation			(2,582	)		(2,442	)
Total property, plant, and equipment, net			3,586			3,695

| June 30, 2024, Form 10-Q

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The depreciation expense in the three months ended June 30, 2024, and 2023 amounted to approximately $142 thousand and $137 thousand, respectively. For more information, please refer to Note 16 – “Segment Information” for the non-current assets other than financial instruments held in the country of domicile and foreign countries.

Asset Held For Sale

During Fiscal 2024, the Company focused on liquidating all non-operating assets to reduce costs and generate cash. As a result, the Company impaired the land situated in Nagpur, India, by approximately $3.3 million to $720 thousand from $4.1 million to bring it closer to the fair market value. The Company believes it can sell the above-said non-operating land as it is without any improvement. Selling this land will give immediate cash, which the Company can use in its operating segments.

During the three months ended June 30,2024, the Company started negotiating with an interested buyer and received approximately $180 thousand as a deposit. In the month of July 2024, the Company entered into an agreement with the buyer to sell the said land for a net realizable value of approximately $717 thousand. The agreement is subject to the final registration and execution. As of June 30, 2024, the Company holds the ownership and possession of the said land.

NOTE 7 – LEFT BLANK INTENTIONALLY

NOTE 8 – CLAIMS AND ADVANCES

	*(in thousands)*
	As of June 30, 2024 ($)		As of March 31, 2024 ($)
Claims receivable ⁽¹⁾		686		686
Non-current deposits		2		2
Total		688		688

(1)	The claims receivable is due from different vendors. While the Company has initiated collection proceedings internally or with the appropriate authorities, it believes receiving the amount in the next 12 months will be challenging because of the time required for collection proceedings.

NOTE 9 – LEFT BLANK INTENTIONALLY

NOTE 10 – ACCRUED AND OTHER LIABILITIES

	*(in thousands)*
	As of June 30, 2024 ($)		As of March 31, 2024 ($)
Compensation and other contributions		1,012		816
Provision for expenses		156		208
Short-term lease liability		133		124
Other current liability		417		419
Total		1,718		1,567

Compensation and other contribution-related liabilities consist of accrued salaries to employees. In addition, provision for expenses includes provision for legal, professional, and marketing expenses. Other current liability also includes statutory payables of approximately $23 thousand and $25 thousand as of June 30, 2024, and March 31, 2024, respectively, and approximately $3 thousand of short-term loans as of June 30, 2024, and March 31, 2024, respectively.

| June 30, 2024, Form 10-Q

Table of Contents

NOTE 11 – LOANS AND OTHER LIABILITIES

Loan as of June 30, 2024:

On June 11, 2020, the Company received an Economic Injury Disaster Loan (“EIDL”) for approximately $150 thousand at an annual interest rate of 3.75%. The Company must pay principal and interest payments of $731 every month beginning June 5, 2021. The SBA will apply each installment payment first to pay interest accrued to the day the SBA receives the payment and will then apply any remaining balance to reduce the principal. All remaining principal and accrued interest is due and payable 30 years from the date of the loan. For the three months ended June 30, 2024, the interest expense and principal payment for the EIDL were approximately $1 thousand and 1 thousand, respectively. For the three months ended June 30, 2023, the interest expense and principal payment for the EIDL were approximately $1 thousand and $1 thousand, respectively. As of June 30, 2024, approximately $136 thousand of the loan is classified as Long-term loans and approximately $3 thousand as Short-term loans.

Other Liability:

	*(in thousands)*
	As of
	June 30, 2024 ($)		March 31, 2024 ($)
Statutory reserve		20		20
Total		20		20

The statutory reserve is a gratuity reserve for employees in our subsidiaries in India.

NOTE 12 – COMMITMENTS AND CONTINGENCIES

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, 2024, except as disclosed in the 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 the employee’s pre-tax contribution up to a maximum annual amount determined by the IRS. In accordance with applicable laws of foreign countries, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. In addition, employees receive benefits from a provident fund, a defined contribution plan. The employee and employer each make monthly contributions to the plan as required by the law. The contribution is made to the Foreign Government’s funds.

NOTE 13 – SECURITIES

As of June 30, 2024, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001 per share, and 75,636,419 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, 2024.

Our common stock is listed on the NYSE American (ticker symbol: IGC). This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1). The Company also has 91,472 units outstanding that can be separated into common stock. Ten units may be separated into one share of common stock. The unit holders are requested to contact the Company or our transfer agent, Continental Stock Transfer and Trust, to separate their units into common stock.

On March 22, 2024, the Company entered into a Share Purchase Agreement (the “March 2024 SPA”) with Bradbury Strategic Investment Fund A, resulting in approximately $3 million in gross proceeds. During the quarter ended June 30, 2024, the Company issued approximately 8.8 million shares of unregistered common stock at a price of $0.34 per share. Shares are intended to be exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”), by virtue of the provisions of Section 4(a)(2) of the Securities Act and Regulation D and/or Regulation S adopted thereunder. During fiscal 2024, the Company had received $500 thousand of the total $3 million due under the March 2024 SPA, while the remaining $2.5 million was received in April 2024.

| June 30, 2024, Form 10-Q

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NOTE 14 – STOCK-BASED COMPENSATION

As of June 30, 2024, under both the Company’s previous 2008 and current 2018 Omnibus Incentive Plans approximately 9.1 million shares of common stock have been issued to employees, non-employees, and advisors. In addition, 7.6 million restricted share units (“RSUs”) fair valued at $4.6 million with a weighted average value of $0.61 per share, have been granted but not yet issued from different Incentive Plans and Grants. This includes 4.9 million RSUs granted to employees and directors, which consists of a vesting schedule based entirely on the attainment of either operational milestones (performance conditions) or market conditions, assuming continued employment either as an employee, or director with the Company. The performance-based RSUs are accounted for upon certification by the management, confirming the probability of achievement of milestones. As of June 30, 2024, the management confirmed that five milestones had been achieved, and the rest were probable to be achieved by March 31, 2028.

Additionally, options held by advisors and directors to purchase 3.7 million shares of common stock fair valued at $925 thousand with a weighted average of $0.25 per share, which have been granted but are to be issued over a vesting period between Fiscal 2022 and Fiscal 2027. Options granted and issued before the vesting period are expensed when issued.

The options are valued using a Black-Scholes Pricing Model, and Market-based RSUs are valued based on a lattice model, with the following assumptions:

	Granted in Fiscal 2025			Granted in Fiscal 2024
Expected life of options	5 years			5 years
Vested options		100	%		100	%
Risk-free interest rate		4.15	%		5.24	%
Expected volatility		175	%		175	%
Expected dividend yield	Nil			Nil

The expense associated with share-based payments to employees, 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 June 30, 2024, the Company’s share-based expense and option-based expense shown in Selling, general, and administrative expenses (including research and development) were $268 thousand and $165 thousand, respectively, and for the three months ended June 30, 2023, the Company’s share-based expense and option-based expense was $354 thousand and $4 thousand, respectively.

Non-vested shares	Shares (in thousands) (#)			Weighted average grant date fair value ($)
Non-vested shares as of March 31, 2024		7,452			0.62
Granted		-			-
Vested		(100	)		0.43
Cancelled/forfeited		-			-
Non-vested shares as of June 30, 2024		7,352			0.61

Options	Shares (in thousands) (#)		Weighted average grant date fair value ($)		Weighted average exercise price ($)
Options outstanding as of March 31, 2024		3,710		0.25		0.29
Granted		-		-		-
Exercised		-		-		-
Cancelled/forfeited		-		-		-
Options outstanding as of June 30, 2024		3,710		0.25		0.29

| June 30, 2024, Form 10-Q

Table of Contents

There was a combined unrecognized expense of $2.7 million related to non-vested shares and share options that the Company expects to be recognized over a life of up to 4 (four) years.

NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS

As of June 30, 2024, the Company’s investments may consist of money market funds, debt and equity funds, and other marketable securities, among others, which have been classified as Level 1 of the fair value hierarchy because they have been valued using quoted prices in active markets. The Company’s cash and cash equivalents have also been classified as Level 1 on the same principle. Financial instruments are classified as current if they are expected to be liquidated within the next twelve months. The Certificates of Deposit are classified as Level 2 as they do not have regular market pricing, but their fair value can be determined based on other data values or market prices. The Company’s remaining investments have been classified as Level 3 instruments as there is little or no market data. Level 3 investments are valued using the cost method.

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2024, and March 31, 2024, and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value:

(in thousands)

As of June 30, 2024

Particular	Adjusted Cost ($)		Gain ($)		Loss ($)		Fair Value ($)		Cash & Cash Equivalents ($)		Short Term Investments ($)
Level 1
Cash		1,569		-		-		1,569		1,569		-
Money Market Fund		-		-		-		-		-		-
Debt Funds		13		-		-		13		13		-
Mutual Fund		68		-		-		68		68		-
Level 2
Certificates of Deposit		174		-		-		174		174		-
Level 3		174		-		-		174		174		-
TOTAL		1,824		-		-		1,824		1,824

SEC Form 10-Q filed by IGC Pharma Inc.