igcpharma20230630

igcpharma20230630_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, 2023

☐	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

53,916,604 shares of our common stock were outstanding as of July 24, 2023.

| June 30, 2023, Form 10-Q

IGC PHARMA, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2023

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	26
Item 4.	Controls and Procedures	26

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	27
Item 1A.	Risk Factors	27
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	28
Item 6.	Exhibits	28

SIGNATURES		29

| June 30, 2023, 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 with 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 a 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, 2023, filed with the Securities and Exchange Commission (“SEC”) on July 7, 2023, 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, 2023, Form 10-Q

	June 30, 2023 ($)			March 31, 2023 ($)
ASSETS
Current assets:
Cash and cash equivalents		1,723			3,196
Accounts receivable, net		225			107
Short term investments		227			154
Inventory		2,641			2,651
Deposits and advances		262			358
Total current assets		5,078			6,466

Non-current assets:
Intangible assets, net		1,179			1,170
Property, plant, and equipment, net		8,104			8,213
Claims and advances		1,017			1,003
Operating lease asset		295			326
Total non-current assets		10,595			10,712
Total assets		15,673			17,178
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		672			530
Accrued liabilities and others		1,459			1,368
Total current liabilities		2,131			1,898

Non-current liabilities:
Long-term loans		140			141
Other liabilities		21			21
Operating lease liability		179			207
Total non-current liabilities		340			369
Total liabilities		2,471			2,267

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, 2023, and March 31, 2023.
Common stock and additional paid-in capital, $0.0001 par value: 150,000,000 shares authorized; 53,077,436 shares issued and outstanding as of June 30, 2023, and March 31, 2023, respectively.		119,322			118,965
Accumulated other comprehensive loss		(3,380	)		(3,389	)
Accumulated deficit		(102,740	)		(100,665	)
Total stockholders’ equity		13,202			14,911
Total liabilities and stockholders’ equity		15,673			17,178

	Three months ended June 30,
	2023 ($)			2022 ($)
Revenue		555			212
Cost of revenue		(300	)		(70	)
Gross profit		255			142
Selling, general and administrative expenses		(1,647	)		(1,550	)
Research and development expenses		(747	)		(1,394	)
Operating loss		(2,139	)		(2,802	)
Other income, net		64			17
Loss before income taxes		(2,075	)		(2,785	)
Income tax expense/benefit		-			-
Net loss attributable to common stockholders		(2,075	)		(2,785	)
Foreign currency translation adjustments		9			(219	)
Comprehensive loss		(2,066	)		(3,004	)

Loss per share attributable to common stockholders:
Basic and diluted	$	(0.04	)	$	(0.05	)
Weighted-average number of shares used in computing loss per share amounts:		53,077,436			51,616,598

	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, 2022		51,054		116,019		(89,159	)		(2,968	)		23,892
Common stock-based compensation & expenses, net		787		1,152		-			-			1,152
Net proceeds from the issuance of common stock		-		-		-			-			-
Net loss		-		-		(2,785	)		-			(2,785	)
Foreign currency translation adjustments		-		-		-			(219	)		(219	)
Balances as of June 30, 2022		51,841		117,171		(91,944	)		(3,187	)		22,040


Balances as of March 31, 2023		53,077		118,965		(100,665	)		(3,389	)		14,911
Common stock-based compensation & expenses, net		-		357		-			-			357
Net proceeds from the issuance of common stock		-		-		-			-			-
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

	Three months Ended June 30,
	2023 ($)			2022 ($)
Cash flows from operating activities:
Net loss		(2,075	)		(2,785	)
Adjustment to reconcile net loss to net cash:
Depreciation and amortization		155			162
Common stock-based compensation and expenses, net		357			1,152
Other non-cash items		(53	)		68

Changes in:
Accounts receivables, net		(118	)		(23	)
Inventory		10			(74	)
Deposits and advances		33			73
Claims and advances		(13	)		15
Accounts payable		142			(524	)
Accrued and other liabilities		91			(258	)
Operating lease asset		31			31
Operating lease liability		(28	)		(33	)
Net cash used in operating activities		(1,468	)		(2,196	)

Cash flow from investing activities:
Purchase of property, plant, and equipment		(20	)		(127	)
Sale of property, plant, and equipment		43			-
Acquisition and filing cost of patents and rights		(28	)		(31	)
Net cash used in investing activities		(5	)		(158	)

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

Effects of exchange rate changes on cash and cash equivalents		1			(52	)
Net decrease in cash and cash equivalents		(1,473	)		(2,407	)
Cash and cash equivalents at the beginning of the period		3,196			10,460
Cash and cash equivalents at the end of the period		1,723			8,053

Supplementary information:
Non-cash items:
Common stock issued/granted for stock-based compensation, including patent acquisition		357			1,152

	(in thousands) Three months ended June 30,
	2023 ($)		2022 ($)
Infrastructure segment (1)		167		10

Life Sciences segment
Wellness and lifestyle (2)		44		80
White labeling services (3)		344		122
Total		555		212

	*(in thousands)*
	As of June 30, 2023 ($)		As of March 31, 2023 ($)
Raw materials		2,091		2,100
Work-in-Progress		-		18
Finished goods		550		533
Total		2,641		2,651

	*(in thousands)*
	As of June 30, 2023 ($)		As of March 31, 2023 ($)
Advances to suppliers and consultants		54		72
Other receivables and deposits		15		24
Prepaid expenses and other current assets		193		262
Total		262		358

Estimated annual amortization expense	*(in thousands)* *($)*
For the year ended 2024		80
For the year ended 2025		88
For the year ended 2026		96
For the year ended 2027		106
For the year ended 2028		117

	*(in thousands, except useful life)*
	Useful Life (years)	As of June 30, 2023 ($)			As of March 31, 2023 ($)
Land	N/A		4,104			4,100
Buildings and facilities	25		2,303			2,298
Plant and machinery	5-20		3,340			3,335
Computer equipment	3		143			138
Office equipment	3-5		88			84
Furniture and fixtures	5		92			92
Vehicles	5		102			102
Total gross value			10,172			10,149
Less: Accumulated depreciation			(2,068	)		(1,936	)
Total property, plant, and equipment, net			8,104			8,213

(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. It includes $140 thousand owed to the company by one of our manufacturers for the equipment purchase.

	*(in thousands)*
	As of June 30, 2023 ($)			As of March 31, 2023 ($)
*Amortized intangible assets*
Patents		721			709
Other intangibles		34			34
Accumulated amortization		(125	)		(107	)
Total amortized intangible assets		630			636

*Other intangible assets*
Patents		549			534
Other intangibles		-			-
Total unamortized intangible assets		549			534
Total intangible assets		1,179			1,170

	Granted in Fiscal 2024			Granted in Fiscal 2023
Expected life of options	5 years			5 years
Vested options		100	%		100	%
Risk-free interest rate		2.64	%		2.64	%
Expected volatility		285	%		285	%
Expected dividend yield	Nil			Nil

Non-vested shares	Shares (in thousands) (#)			Weighted average grant date fair value ($)
Non-vested shares as of March 31, 2023		4,429			1.01
Granted		4,300			0.30
Vested		(192	)		0.30
Cancelled/forfeited		-			-
Non-vested shares as of June 30, 2023		8,537			0.65

Options	Shares (in thousands) (#)		Weighted average grant date fair value ($)		Weighted average exercise price ($)
Options outstanding as of March 31, 2023		150		1.39		0.30
Granted		-		-		-
Exercised		-		-		-
Cancelled/forfeited		-		-		-
Options outstanding as of June 30, 2023		150		1.39		0.30

	*(in thousands)*
	As of
	June 30, 2023 ($)		March 31, 2023 ($)
Statutory reserve		21		21
Total		21		21

Particular	Adjusted Cost ($)		Gain ($)		Loss ($)		Fair Value ($)		Cash & Cash Equivalents ($)		Short Term Investments ($)
Level 1
Cash		641		-		-		641		641		-
Money Market Fund		1,051		-		-		1,051		1,051		-
Debt Funds		13		-		-		13		13		-
Mutual Fund		155		10		-		165		-		165
Level 2
Certificate of Deposits		80		-		-		80		18		62
Level 3		-		-		-		-		-		-
TOTAL		1,940		10		-		1,950		1,723		227

	*(in thousands)*
Segments	Three months ended June 30, 2023 ($)		Percentage of Total Revenue (%)

Infrastructure segment		167		30	%
Life Sciences segment		388		70	%
Total		555		100	%

	*(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	Country	Three months ended June 30, 2023 ($)		Percentage of Total Revenue (%)

Asia	India		167		30	%
America	U.S.		388		70	%
Total			555		100	%

	*(in thousands)*
Nature of assets	USA (Country of Domicile) ($)		Foreign Countries (India, Hong Kong, and Colombia) ($)		Total as of June 30, 2023 ($)
Intangible assets, net		1,179		-		1,179
Property, plant, and equipment, net		3,958		4,146		8,104
Claims and advances		597		420		1,017
Operating lease asset		273		22		295
Total non-current assets		6,007		4,588		10,595