What changed in this filing

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Item 1. Financial Statements

2022-11-01 compared with 2022-08-05 · 348 added, 322 removed, 539 unchanged (55% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

Current assets:

1 unchanged sentence

Accounts receivable, net

Short term investments

Deposits and advances

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Accrued liabilities and others

Short-term loans

Total current liabilities

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Preferred stock, $ 0.0001 par value:

authorized 1,000,000 shares, no shares issued or outstanding as of June 30, 2022, and March 31, 2022.

authorized 1,000,000 shares, no shares issued or outstanding as of September 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.

53,058,061 and 51,054,017 shares issued and outstanding as of September 30, 2022, and March 31, 2022, respectively.

Accumulated other comprehensive loss

3 unchanged sentences

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

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

India Globalization Capital, Inc.

1 unchanged sentence

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

Three months ended June 30,

Three months ended

September 30,

Six months ended

September 30,

Cost of revenue

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Comprehensive loss

Loss per share attributable to common stockholders:

Net loss per share attributable to common stockholders:

Basic and diluted

Weighted-average number of shares used in computing loss per share amounts:

Weighted-average number of shares used in computing net loss per share amounts:

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

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

India Globalization Capital, Inc.

1 unchanged sentence

(in thousands)

Three months ended September 30, 2021

Common Shares

4 unchanged sentences

Total Stockholders’

Balances as of June 30, 2021

Common stock-based compensation & expenses, net

Issuance of common stock through offering (net of expenses)

Foreign currency translation adjustments

Balances as of September 30, 2021

Three months ended September 30, 2022

Balances as of June 30, 2022

Common stock-based compensation & expenses, net

Issuance of common stock through offering (net of expenses)

Foreign currency translation adjustments

Balances as of September 30, 2022

Six months ended September 30, 2021

Common Shares

Common Stock and

Additional Paid in

Accumulated Other

Comprehensive Loss

Total Stockholders’

Balances as of March 31, 2021

Common stock-based compensation and expenses, net

Common stock-based compensation & expenses, net

Issuance of common stock through offering (net of expenses)

Other adjustments

Loss on foreign currency translation

Balances as of June 30, 2021

Foreign currency translation adjustments

Balances as of September 30, 2021

Six months ended September 30, 2022

Balances as of March 31, 2022

Common stock-based compensation and expenses, net

Common stock-based compensation & expenses, net

Issuance of common stock through offering (net of expenses)

Loss on foreign currency translation

Balances as of June 30, 2022

Foreign currency translation adjustments

Balances as of September 30, 2022

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

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

India Globalization Capital, Inc.

1 unchanged sentence

(in thousands)

Three months Ended

Six months Ended

September 30,

Cash flows from operating activities:

1 unchanged sentence

Depreciation and amortization

Provision for bad debt

Impairment of non-marketable securities

Common stock-based compensation and expenses, net

Loss on sale of Fixed Asset

Net loss on sale of fixed asset

Forgiveness of PPP Loan

8 unchanged sentences

Cash flow from investing activities:

Purchase of property, plant, and equipment

Net purchase of property, plant, and equipment

Investment in short term investments

Acquisition and filing cost of patents and rights

Net cash used in investing activities

Net cash provided by/(used in) investing activities

Cash flows from financing activities:

Issuance of equity stock through offering (net of expenses)

Proceeds from/repayment of long-term loan

Net cash (used in)/provided by financing activities

Repayment of long-term loan

Net cash provided by financing activities

Effects of exchange rate changes on cash and cash equivalents

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

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

India Globalization Capital, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED JUNE 30, 2022

THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2022

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

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NOTE 1 – BUSINESS DESCRIPTION

Corporate History

IGC has two business segments:

Infrastructure and Life Sciences.

Infrastructure Segment

We are a Maryland corporation established in 2005.

Our fiscal year is the 52- or 53-week period ending March 31.

Overview of the Infrastructure Segment

The Infrastructure segment involves the execution 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 :

The Company operates its Infrastructure segment from India.

Overview of Life Sciences Segment

The Life Sciences segment operates primarily through wholly owned subsidiaries including IGC Pharma LLC, a clinical-stage biopharmaceutical company based in Maryland.

The purpose of IGC Pharma LLC is to effectively treat Alzheimer’s patients and alleviate caregiver burden.

Over the past eight years, we have developed a deep knowledge of cannabinoid science, including its extraction, isolation, purification, and development.

Our strategy is to leverage our unique platform to develop a class-leading program to treat neurodegenerative diseases such as Alzheimer’s.

We currently have two main investigational drug assets in various stages of development:

IGC-AD1, our lead therapeutic candidate is in Phase 2 trials for treating agitation in dementia from Alzheimer’s, and

TGR-63, an enzyme inhibitor shown in pre-clinical trials to reduce neurotoxicity in Alzheimer's cell lines.

IGC-AD1 and TGR-63, both small molecules, have shown in Alzheimer’s cell lines, that they can potentially suppress or ameliorate a key protein responsible for Aβ plaques, a key hallmark of Alzheimer’s disease.

The Company controls eight patents and seven patent applications, including two each for IGC-AD1 and TGR-63 and their use related to Alzheimer’s.

The Life Sciences segment also includes the development of over-the-counter personal care products, operated by certain of the Company’s subsidiaries under various brand lines.

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.

Holief™ is a vegan, non-GMO, cruelty free, paraben free, lab verified, CBD infused line of OTC products with plant based ingredients aimed at supporting menstrual cramp (dysmenorrhea) discomforts and other premenstrual symptoms (“PMS”).

Sunday Seltzer™ is a vegan, organic, lightly carbonated energy drink with natural caffeine from green tea extract, CBD, vitamin B and vitamin C, with 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 creation 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.

In addition, Sunday Seltzer™ is also available in four other flavors with no caffeine.

Both Holief™ and Sunday Seltzer™ are compliant with applicable federal, state, and local laws, and regulations.

| September 30, 2022, Form 10-Q

Other Recent Developments

On September 20, 2022, the USPTO granted a second patent (#11,446,276) for the treatment of Alzheimer’s disease titled “Extreme low dose THC as a therapeutic and prophylactic agent for Alzheimer’s disease.” The original patent application was initiated by the University of South Florida (“USF”) and filed on August 1, 2016.

On May 25, 2017, the Company entered into an exclusive license agreement with USF with respect to the patent application and the associated research conducted on Alzheimer’s disease.

IGC-AD1, described above, is based on some of this research.

Business Organization

As of June 30, 2022, the Company had the following operating subsidiaries:

As of September 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).

Ltd., and Colombia-based beneficially owned subsidiary Hamsa Biopharma Colombia SAS (formerly Hamsa Biochem SAS).

The Company’s fiscal year is the 52- or 53-week period that ends on March 31.

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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 accompanying condensed consolidated Balance Sheet as of September 30, 2022, and March 31, 2022, condensed consolidated statements of operations for the three months and six months ended September 30, 2022, and 2021, and condensed consolidated statements of changes in stockholders’ deficit for the three months and six months ended September 30, 2022, and 2021, and condensed consolidated statements of cash flows for the six months ended September 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.

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Actual results could differ from those estimates.

| September 30, 2022, Form 10-Q

Management believes that the estimates and assumptions used in the preparation of the consolidated financial statements are prudent and reasonable.

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Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the condensed consolidated financial statements.

| June 30, 2022, Form 10-Q

Presentation and functional currencies

IGC operates in India, U.S., Colombia, and Hong Kong, and a portion of the Company’s financials are denominated in the Indian Rupee (“INR”), the Hong Kong Dollar (“HKD”), or the Colombian Peso (“COP”).

IGC operates in the U.S., India, Colombia, and Hong Kong, and a portion of the Company’s financials are denominated in 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.

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The INR, HKD, and COP 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 and expenses using average exchange rates prevailing during the reporting periods.

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.

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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.

For assets, the Company intends to dispose of by sale, a loss or profit 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.

No impairment has been recorded for the six months ended September 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.

Short-term and long-term investments consist of equity investment, mutual funds, corporate, various government securities, and municipal debt securities, as well as certificates of deposit.

Certificates of deposit and commercial paper are carried at cost which approximates fair value.

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Where the Company does not have significant influence, the Company has accounted for the investment in accordance with ASC Topic 321, “Investments-Equity Securities.”

As of June 30, 2022, the Company does not have any investment in marketable securities.

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

We consider all highly liquid interest-earning investments with a maturity of three months or less at the date of purchase to be cash equivalents.

The fair values of these investments approximate their carrying values.

In general, investments with original maturities of greater than three months and remaining maturities of less than one year are classified as short-term investments.

Investments with maturities beyond one year may be classified as short-term based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations.

Debt investments are classified as available-for-sale and realized gains and losses are recorded using the specific identification method.

Changes in fair value, excluding credit losses and impairments, are recorded in other comprehensive income.

Fair value is calculated based on publicly available market information or other estimates determined by management.

If the cost of an investment exceeds its fair value, we evaluate, among other factors, general market conditions, credit quality of debt instrument issuers, and the extent to which the fair value is less than the cost.

To determine credit losses, we employ a systematic methodology that considers available quantitative and qualitative evidence.

In addition, we consider specific adverse conditions related to the financial health of, and business outlook for, the investee.

If we have plans to sell the security or it is more likely than not that we will be required to sell the security before recovery, then a decline in fair value below cost is recorded as an impairment charge in other income (expense), net and a new cost basis in the investment is established.

If market, industry, and/or investee conditions deteriorate, we may incur future impairments.

Equity investments with readily determinable fair values are measured at fair value.

Equity investments without readily determinable fair values are measured using the equity method or measured at cost with adjustments for observable changes in price or impairments (referred to as the measurement alternative).

We perform a qualitative assessment on a periodic basis and recognize an impairment if there are sufficient indicators that the fair value of the investment is less than the carrying value.

Changes in value are recorded in other income (expense), net.

As of September 30, 2022, the Company has approximately $ 193 thousand in short-term investments.

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 stock-based compensation to employees and non-employees in conformity ASC Topic 718, “Stock-Based Compensation.” The Company expenses stock-based compensation to employees over the requisite vesting period based on the award’s estimated grant-date fair value.

The Company accounts for forfeitures as they occur.

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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 fair value of such awards is estimated on the grant date using the 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.

The assumptions 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.

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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 $ 147 thousand of accounts receivable, net of provision for the doubtful 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 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.

If a customer’s financial condition deteriorates, additional allowances may be required.

We had $ 189 thousand of accounts receivable, net of provision for the doubtful debt of $ 35 thousand as of September 30, 2022, as compared to $ 125 thousand of accounts receivable, net of provision for the doubtful debt of $ 93 thousand as of March 31, 2022.

| September 30, 2022, Form 10-Q

Inventory is valued at the lower of cost or net realizable value, 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 and 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, and 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.

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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 June 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 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.

The computation of basic loss per share for the six months ended September 30, 2022, excludes potentially dilutive securities of approximately 6.1 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 the conversion of outstanding units, if any because their inclusion would be anti-dilutive.

The weighted average number of shares outstanding for the six months ended September 30, 2022, and 2021, used for the computation of basic earnings per share (“EPS”), is 52,082,096 and 48,935,466 , respectively.

Due to the loss incurred by the Company during the six months ended September 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.

In the six months ended September 30, 2022, there were no impactful breaches in cybersecurity.

| September 30, 2022, Form 10-Q

Intangible assets

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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 in the Infrastructure segment is recognized for the renting business when the equipment is rented, and terms of the agreement have been fulfilled during the period.

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.

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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:

| September 30, 2022, Form 10-Q

Net sales disaggregated by significant products and services for the six months ended September 30, 2022, and 2021 are as follows:

(in thousands)

Three months ended June 30,

Six months ended September 30,

Infrastructure segment

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White labeling services (4)

(1) Rental income consists of income from rental of heavy construction equipment.

(1) Rental income consists of income from the rental of heavy construction equipment.

(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 lifestyle 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.

(4) Relates to revenue from the Life Sciences segment, including income from white label services, which refers to a fully supported product or service made by us but sold by another company.

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.

Under the current ASU guidance, contract consideration will be allocated to its lease 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 not to separate the non-lease components from the associated lease component.

The amendments in 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”).

2 unchanged sentences

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.

As a 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;

The timing of revenue recognition is expected to be the same for most of 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.

Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being non-accrual, 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.

| September 30, 2022, Form 10-Q

Lessee Accounting

11 unchanged sentences

All right-of-use assets are reviewed for impairment.

There was no impairment for right-of-use lease assets as of June 30, 2022.

There was no impairment for right-of-use lease assets as of September 30, 2022.

The Company categorizes leases at their inception as either operating or finance leases.

8 unchanged sentences

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)

June 30, 2022

September 30, 2022

March 31, 2022

2 unchanged sentences

Finished goods

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).

Inventory in the form of work-in-progress is moved into raw materials as we process the hemp extracts into different hemp derivatives used in the production of finished goods.

Finished goods comprise, but is not limited to, hand sanitizers, gummies, lotions, and beverages, among others.

| September 30, 2022, Form 10-Q

During the six months ended September 30, 2022, the Company wrote off approximately $ 40 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.

1 unchanged sentence

(in thousands)

June 30, 2022

September 30, 2022

March 31, 2022

1 unchanged sentence

Other receivables and deposits

Prepaid expense and other current assets

The Advances to suppliers and consultants primarily relate to advances to suppliers in our Life Sciences and Infrastructure segments.

Prepaid expense and other current assets include approximately $ 125 thousand of statutory advances as of June 30, 2022, as compared to $ 170 thousand as of March 31, 2022.

Prepaid expenses and other current assets

As of September 30, 2022, the Company accounted for approximately $ 193 thousand worth of cash deposits in short-term investments.

NOTE 5 – INTANGIBLE ASSETS

(in thousands)

June 30, 2022

September 30, 2022

Amortized intangible assets

2 unchanged sentences

Total amortized intangible assets

Other intangible assets

Unamortized intangible assets

Other intangibles

1 unchanged sentence

Total intangible assets

| 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.

1 unchanged sentence

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.

Accordingly, the amortization expense in the three months ended September 30, 2022, and 2021 amounted to approximately $ 14 thousand and $ 6 thousand, respectively, whereas the amortization expense in the six months ended September 30, 2022, and 2021 amounted to approximately $ 24 thousand and $ 11 thousand, respectively.

Estimated amortization expense

5 unchanged sentences

For the year ended 2028

| September 30, 2022, Form 10-Q

NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT

1 unchanged sentence

Useful Life (years)

June 30, 2022

September 30, 2022

March 31, 2022

8 unchanged sentences

Total property, plant, and equipment, net

The depreciation expense in the three months ended June 30, 2022, and 2021, amounted to approximately $ 152 thousand for each of the periods.

The net decrease in total Property, Plant and Equipment is primarily due to depreciation and foreign exchange translations of a decrease in value of foreign currencies.

As of June 30, 2022, the construction in progress related to the Maryland office extension is completed and moved to Building and facilities.

The depreciation expense in the three months ended September 30, 2022, and 2021 amounted to approximately $ 156 thousand and $ 157 thousand, respectively.

The depreciation expense in the six months ended September 30, 2022, and 2021 amounted to approximately $ 308 thousand and $ 309 thousand, respectively.

The net decrease in total Property, Plant, and Equipment is primarily due to depreciation and foreign exchange translations of a decrease in the value of foreign currencies.

As of September 30, 2022, the Company disposed of fully depreciated assets in the amount of approximately $ 1.3 million from one of its subsidiaries.

This resulted in a reduction in the value of total gross assets but did not affect the net value of assets as the disposed assets had previously been fully depreciated.

In addition, the Company sold a property in Puerto Rico for net proceeds of approximately $ 485 thousand (acquired for approximately $ 480 thousand) and accounted for a profit of approximately $ 5 thousand in other income.

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.

NOTE 7 – LEFT BLANK INTENTIONALLY

| June 30, 2022, Form 10-Q

NOTE 8 – CLAIMS AND ADVANCES

(in thousands)

June 30, 2022

September 30, 2022

March 31, 2022

1 unchanged sentence

Non-current advances (2)

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.

Includes $ 200 thousand owed to one of our manufacturers for the purchase of equipment.

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.

Includes $ 140 thousand owed to one of our manufacturers for the equipment purchase.

| September 30, 2022, Form 10-Q

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.

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 total short-term lease expense and cash paid for the six months ended September 30, 2022, and 2021 are approximately $ 89 thousand and $ 82 thousand, respectively.

The Company also has four operating leases as of September 30, 2022.

The Company has entered into a lease agreement for approximately five years, expiring in 2025.

The annual lease expense is approximately $ 122 thousand.

3 unchanged sentences

Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.

The Company renewed three lease agreements for terms between three to four years expiring between 2023 and 2024.

The Company has three lease agreements for three to four years, expiring between 2023 and 2024.

The total annual lease expense is approximately $ 6 thousand.

5 unchanged sentences

Three months ended

June 30, 2022

September 30, 2022

(in thousands)

Three months ended

June 30, 2021

September 30, 2021

(in thousands)

Six months ended

September 30, 2022

(in thousands)

Six months ended

September 30, 2021

Operating lease costs

Short term lease costs

Variable lease costs

Total lease costs

| 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:

1 unchanged sentence

(in thousands)

June 30, 2022

September 30, 2022

March 31, 2022

6 unchanged sentences

Total lease liability

| September 30, 2022, Form 10-Q

(in thousands)

June 30, 2022

September 30, 2022

Supplemental cash flow and non-cash information related to leases is as follows:

2 unchanged sentences

Right-of-use assets obtained in exchange for operating lease obligations

As of June 30, 2022, the following table summarizes the maturity of our lease liabilities:

As of September 30, 2022, the following table summarizes the maturity of our lease liabilities:

Present value discount

2 unchanged sentences

(in thousands)

June 30, 2022

September 30, 2022

March 31, 2022

1 unchanged sentence

Provision for expenses

Short-term lease liability

Other current liability

| 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, 2022, respectively.

In addition, the provision for expenses includes provision for legal, professional, and marketing expenses.

Other current liability also includes statutory payables of approximately $ 25 thousand and $ 55 thousand and approximately $ 3 thousand of short-term loans as of September 30, 2022, and March 31, 2022, respectively.

NOTE 11 – LOANS AND OTHER LIABILITIES

Loan as of June 30, 2022:

Loan as of September 30, 2022:

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 SBA receives the payment and will then apply any remaining balance to reduce 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, 2022, the interest expense and principal payment for the EIDL was approximately $ 1 thousand and $ 1 thousand respectively and for the three months ended June 30, 2021, the interest expense was approximately $ 469 .

As of June 30, 2022, approximately $ 143 thousand of the loan is classified as Long-term loans and approximately $ 3 thousand as Short-term loans.

For each installment payment, the U.S.

Small Business Administration (SBA) will apply the payment first to pay interest accrued to the day SBA receives the payment then to any remaining balance to reduce principal.

All remaining principal and accrued interest are due and payable 30 years from the loan date.

For the six months ended September 30, 2022, the interest expense and principal payment for the EIDL were approximately $ 2 thousand each.

For the six months ended September 30, 2021, the interest expense and principal payment for the EIDL were approximately $ 1.4 thousand and $ 1 thousand, respectively.

As of September 30, 2022, approximately $ 143 thousand of the loan is classified as long-term loans and approximately $ 3 thousand as short-term loans.

| September 30, 2022, Form 10-Q

Other Liability:

(in thousands)

June 30, 2022

September 30, 2022

March 31, 2022

4 unchanged sentences

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.

Accordingly, no such matters that are deemed material to the condensed consolidated financial statements as of September 30, 2022, 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 Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering certain categories of employees.

In addition, under applicable Indian laws, 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.

3 unchanged sentences

NOTE 13 – SECURITIES

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.

As of September 30, 2022, the Company was authorized to issue up to 150,000,000 shares of common stock, a par value of $ 0.0001 per share, and 53,058,061 shares of common stock were issued and outstanding.

The Company is also authorized to issue up to 1,000,000 shares of preferred stock, a par value of $ 0.0001 per share, and no preferred shares were issued and outstanding as of September 30, 2022.

Our common stock is listed on the NYSE American (ticker symbol:

3 unchanged sentences

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.

| 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 sale of up to $ 75,000,000 of the Company’s shares of common stock, par value $ 0.0001 per share (the “Shares”), from time to time in an “at the market” (“ATM”) offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

On January 13, 2021, the Company entered into a Sales Agreement (the “Agreement”) with The Benchmark Company, LLC (the “Sales Agent”), under which the Sales Agent is acting as the Company’s sales agent with respect to the issuance and sale of up to $ 75,000,000 of the Company’s shares of common stock, par value $ 0.0001 per share (the “Shares”), from time to time in an “at the market” (“ATM”) offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.

NOTE 14 – STOCK-BASED COMPENSATION

As of June 30, 2022, under both the Company’s previous 2008 and current 2018 Omnibus Incentive Plans, a total of 8,337,627 shares of common stock have been 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 June 30, 2022, Management confirmed two of the milestones had been achieved and rest were considered probable to be achieved by March 31, 2027.

As of September 30, 2022, under the Company’s previous 2008 and current 2018 Omnibus Incentive Plans, a total of 8,412,627 shares of common stock have been issued to employees, non-employees, and advisors.

In addition, 5.8 million restricted share units (RSUs), valued at $ 5.7 million with a weighted average value of $ 0.98 per share, have been granted but not yet issued from different Incentive Plans and Grants.

This includes 3 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 management, confirming the probability of achievement of milestones.

As of September 30, 2022, management confirmed two milestones had been achieved, and the rest were probable to be achieved by March 31, 2027.

| September 30, 2022, Form 10-Q

Additionally, options held by advisors and directors to purchase 300 thousand shares of common stock fair 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 service period are expensed when exercised.

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

Granted in Fiscal 2023

Granted in Fiscal 2022

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

Expected life of options

4 unchanged sentences

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, 2022, the Company’s share-based expense and option-based expense shown in Selling, General and Administrative expenses (including research and development) was $ 1.14 million and $ 8 thousand, respectively.

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, 2021, the Company’s share-based expense and option-based expense shown in Selling, General and Administrative expenses (including research and development) was $ 120 thousand and $ 5 thousand, respectively.

For the six months ended September 30, 2022, the Company’s share-based and option-based expenses shown in selling, general and administrative expenses (including research and development) were $ 1.8 million and $ 17 thousand, respectively.

For the six months ended September 30, 2021, these expenses were $ 535 thousand and $ 14 thousand, respectively.

Non-vested shares

4 unchanged sentences

Cancelled/forfeited

Non-vested shares as of June 30, 2022

| June 30, 2022, Form 10-Q

Non-vested shares as of September 30, 2022

(in thousands)

5 unchanged sentences

Cancelled/forfeited

Options outstanding as of June 30, 2022

Options outstanding as of September 30, 2022

There was a combined unrecognized expense of $ 4.1 million related to non-vested shares and share options that the Company expects to be recognized over the weighted average life of 2.3 years.

| September 30, 2022, Form 10-Q

NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS

As of June 30, 2022, the Company’s marketable securities, if any, may consist of liquid funds, which have been classified as Level 1 of the fair value hierarchy because they have been valued using quoted prices in active markets.

As of September 30, 2022, 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 Cash Deposits are classified as Level 2 as they do not have regular market pricing, but its 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 cost-method.

For further information refer to Note 7, “Investments in Non-Marketable Securities.”

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 techniques the Company used to determine such fair value:

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 September 30, 2022, and March 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value:

As of September 30, 2022

(in thousands)

June 30, 2022

Cash and cash equivalents:

Total cash and cash equivalents

-Marketable securities

-Non-marketable securities

Total Investments

March 31, 2022

Cash and cash equivalents:

Total cash and cash equivalents

-Marketable securities

-Non-marketable securities

Total investments

| June 30, 2022, Form 10-Q

Adjusted Cost

Cash Equivalents

Money Market Fund

Certificate of Deposits

As of March 31, 2022

(in thousands)

Adjusted Cost

Cash Equivalents

Money Market Fund

Certificate of Deposits

| September 30, 2022, Form 10-Q

NOTE 16 – 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.

2 unchanged sentences

The Company’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.

The CEO reviews financial information presented on an operating segment basis to make operating decisions and assess financial performance.

Therefore, before our Life Sciences segment started, the Company determined that it operated in a single operating and reportable segment.

As of the date of this report and in preparation for the new and different source of revenue, the Company has determined that it operates in two operating and reportable segments:

5 unchanged sentences

(in thousands)

Three months ended

June 30, 2022

Six months ended

September 30, 2022

Percentage of

3 unchanged sentences

(in thousands)

Three months ended

June 30, 2021

Six months ended

September 30, 2021

Percentage of

3 unchanged sentences

For information for revenue by product and service, refer Note 2, “Summary of Significant Accounting Policies”.

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

2) The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries.

1 unchanged sentence

(in thousands)

Three months ended

June 30, 2022

Six months ended

September 30, 2022

Percentage of

1 unchanged sentence

(in thousands)

Three months ended

June 30, 2021

Six months ended

September 30, 2021

Percentage of

6 unchanged sentences

(India, Hong Kong, and Colombia)

June 30, 2022

September 30, 2022

Intangible assets, net

11 unchanged sentences

Property, plant, and equipment, net

Non-marketable securities

Claims and advances

3 unchanged sentences

None to report.

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

Management ’ s Discussion and Analysis of Financial Condition and Results of Operations

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide an understanding of the 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 June 23, 2022 (the “2022 Form 10-K”).

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide an understanding of the Company’s consolidated financial condition and results of operations and cash flows.

It 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 and six months ended September 30, 2022, and the Annual Report on Form 10-K for the fiscal year ended March 31, 2022, filed with the SEC on June 23, 2022 (the “2022 Form 10-K”).

The Company’s actual results could differ materially from those discussed here.

Factors that could cause differences include those discussed in the “Forward-Looking Statements” and “Risk Factors” sections, as well as discussed elsewhere in this report.

Factors that could cause differences include those discussed in the “Forward-Looking Statements” and “Risk Factors” sections and discussed elsewhere in this report.

The risks and uncertainties can cause actual results to differ significantly from those in our forward-looking statements or implied in historical results and trends.

We caution readers not to place undue reliance on any 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 which any such statements may be based, or that may affect the likelihood that actual results will differ from those set forth in the forward-looking statements.

Accordingly, we caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.

We disclaim any obligation, except as expressly 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 which any such statements may be based, or that may affect the likelihood that actual results will differ from those outlined in the forward-looking statements.

IGC has two segments:

Life Sciences and Infrastructure.

Infrastructure Segment

The Infrastructure segment involves the execution 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 :

The Life Sciences segment operates primarily through wholly owned subsidiaries including IGC Pharma LLC, a clinical-stage biopharmaceutical company based in Maryland.

The purpose of IGC Pharma LLC is to effectively treat Alzheimer’s patients and alleviate caregiver burden.

Over the past eight years we have developed a deep knowledge of cannabinoid science including its extraction, isolation, purification, and development.

Our strategy is to leverage our unique platform to develop a class-leading program to treat neurodegenerative diseases such as Alzheimer’s.

We currently have two main investigational drug assets in various stages of development:

IGC-AD1 our lead therapeutic candidate is in Phase 2 trials for treating agitation in dementia from Alzheimer’s;

TGR-63, an enzyme inhibitor shown in pre-clinical trials to reduce neurotoxicity in Alzheimer's cell lines.

IGC-AD1 and TGR-63 both small molecules have shown in Alzheimer’s cell lines that they can potentially suppress or ameliorate a key protein responsible for Aβ plaques, a key hallmark of Alzheimer’s disease.

The Company controls eight patents and seven applications including two each for IGC-AD1 and TGR-63 and their use in Alzheimer’s.

IGC-AD1 is an investigational new drug candidate that is currently in a multi-site, randomized, double blind, Phase 2 clinical trial for agitation in dementia from Alzheimer’s.

Currently, there are no FDA approved drugs for treating agitation in Alzheimer’s.

About 76% of Alzheimer’s patients suffer from agitation as rated by the CMAI (Van der Mussele et al., 2015).

IGC-AD1 is a cannabis-based compound that relies on micro doses of THC (tetrahydrocannabinol), a psychoactive cannabinoid and another compound as active agents.

The Phase 2 trial is a first in human trial with natural THC as an active agent for treating agitation in Alzheimer’s.

The second molecule, TGR-63, is an enzyme inhibitor 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 through further trials, testing, and research, TGR-63 can potentially treat Alzheimer's disease by ameliorating Aβ plaques.

| September 30, 2022, Form 10-Q

The Life Sciences segment also includes the development of over-the-counter personal care products, operated by certain of the Company’s subsidiaries under various brands.

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.

Sunday Seltzer™ is a vegan, organic, lightly carbonated energy drink with natural caffeine from green tea extract, CBD, vitamin B and vitamin C, with 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 :

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.

| June 30, 2022, Form 10-Q

Food and Drug Administration (the “FDA”).

In addition, Sunday Seltzer™ is also available in four other flavors with no caffeine.

Both Holief™ and Sunday Seltzer™ are compliant with applicable federal, state, and local laws, and regulations.

Infrastructure Segment

The Infrastructure segment involves the execution of construction contracts and the rental of heavy construction equipment.

Since our inception, the Company has operated its Infrastructure segment from India.

Other Developments

Our pipeline of investigational and development cannabinoid formulations also includes pain creams and tinctures for pain relief.

We believe this may provide us with several profit opportunities, although there can be no assurance of such profit opportunities.

Company Highlights

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.

(“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.

On May 25, 2017, the Company entered into an exclusive license agreement with USF with respect to the patent application and the associated research conducted on Alzheimer’s disease.

IGC-AD1, described above, is based on some of this research.

The Life Sciences segment strategy includes:

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.

Marketing Holief TM , Sunday Seltzer TM , 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 Holief TM strategy includes expanding the line of products and developing online services that connect women with healthcare professionals who can help with PMS and dysmenorrhea.

Marketing Holief™, Sunday Seltzer™, and white label services.

We believe developing a drug for either treatment of symptoms or as a disease modifying agent has considerable risk due to the need for multi-year trials and FDA approval.

However, there could be a considerable upside and significant value creation to the extent we obtain a first-to-market advantage, of which there can be no assurance.

If we were to obtain a first-to-market advantage, such an advantage could result in significant growth when an approved drug is marketed.

Our Holief TM strategy includes expanding the line of products and developing online services that connect women with healthcare professionals who can help with PMS and dysmenorrhea, more specifically.

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 drive positive patient and customer experiences.

We believe these investments will fuel the development and delivery of innovative products that drive 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.

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Our Infrastructure segment strategy includes winning and executing competitively bid construction contracts, such as building roads, bridges, and other civil works in Kerala, India.

| September 30, 2022, Form 10-Q

COVID-19 Update

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The restrictions continue to adversely impact our infrastructure business, financial 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.

In response, we have 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

We have limited visibility into when economic conditions will recover in India and Hong Kong for the infrastructure business.

Results of Operations for the Three Months Ended September 30, 2022, and September 30, 2021

The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

The following table presents an overview of our results of operations for the three months ended June 30, 2022, and June 30, 2021:

The following table presents an overview of our results of operations for the three months ended September 30, 2022, and September 30, 2021:

Statement of Operations (in thousands, unaudited)

Three months ended June 30,

Three months ended September 30,

Cost of revenue

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Operating loss

Other income, net

Loss before income taxes

Income tax expense/benefit

Revenue – Revenue was approximately $202 thousand and $56 thousand for the three months ended September 30, 2022, and September 30, 2021, respectively.

Revenue in both quarters was primarily derived from our Life Sciences segment, which involved providing white label manufactured products, sales of holistic women’s health care products and beverages including the Company’s energy drink, among others.

The increase in sales was primarily related to increased sales of the Company’s services and products.

The Infrastructure segment revenue was impacted by the slow recovery from the COVID-19 pandemic, and the onset of the monsoon season in India, which hampers construction activity.

Cost of revenue – The cost of revenue amounted to approximately $67 thousand for the three months ended September 30, 2022, compared to $18 thousand in the three months ended September 30, 2021, this represents gross margins of 67% and 68%, respectively.

The change in the cost of revenue is primarily attributable to the cost of raw materials required to produce our products.

There is a lack of visibility in the cost of revenue moving forward due to overall inflationary pressures.

Selling, general and administrative expenses (“SG&A”) – SG&A expenses were approximately $1.9 million and $4.1 million for the three months ended September 30, 2022 and September 30, 2021 respectively.

The decrease of $2.2 million is attributed to an adjustment of one-time expenses, and a reduction of legal and marketing expenses.

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 advance if any.

Research and Development expenses – R&D expenses were attributed to our Life Sciences segment.

The R&D expenses increased by approximately $492 thousand, or 178%, to $768 thousand during the three months ended September 30, 2022, from approximately $276 thousand during the three months ended September 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 increased R&D expenses as development of TGR-63 and the Phase 2 trial on Alzheimer’s pick up more momentum.

| September 30, 2022, Form 10-Q

Other income, net – Other net income increased by approximately $42 thousand or 1,050% during the three months ended September 30, 2022.

The total other income for the three months ended September 30, 2022, and 2021 is approximately $46 thousand and $4 thousand, respectively.

Other income includes interest and rental income, dividend income, profit from sale of assets, unrealized gains from investments, net income, and income from the sale of scrap.

Results of Operations for the Six Months Ended September 30, 2022, and September 30, 2021

The historical results presented below are not necessarily indicative of the results that may be expected for any future period.

The following table presents an overview of our results of operations for the six months ended September 30, 2022, and September 30, 2021:

Statement of Operations (in thousands, unaudited)

Six months ended September 30,

Cost of revenue

Selling, general and administrative expenses

Research and development expenses

Operating loss

Impairment of investment

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Income tax expense/benefit

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 lotion, gummies, and alcohol-based hand sanitizers, among others.

Revenue was approximately $212 thousand and $77 thousand for the three months ended June 30, 2022, and June 30, 2021, respectively.

The Infrastructure segment had lower revenue during the three months ended June 30, 2022 due to the slower recovery from the COVID-19 pandemic, the ensuing disruption, and the onset of the monsoon season in India, which hampers construction activity.

We anticipate lower revenue from the Infrastructure segment for the foreseeable future.

| June 30, 2022, Form 10-Q

Cost of revenue – Cost of revenue amounted to approximately $70 thousand for the three months ended June 30, 2022, compared to $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 June 30, 2022, from approximately $1.8 million for the three months ended June 30, 2021.

The decrease is from decreased marketing and legal expenses.

Revenue – Revenue was approximately $414 thousand and $133 thousand for the six months ended September 30, 2022, and September 30, 2021, respectively.

The increase in sales was primarily related to increased sales of the Company’s services and products.

The Infrastructure segment revenue was impacted by the slow recovery from the COVID-19 pandemic, and the onset of the monsoon season in India, which hampers construction activity..

Cost of revenue – The cost of revenue amounted to approximately $137 thousand for the six months ended September 30, 2022, compared to $69 thousand in the six months ended September 30, 2021, this represents gross margins of 67% and 48%, respectively.

The change in cost of revenue is primarily attributable to the cost of raw materials required to produce our products.

While gross margins increased, year over year, there is lack of visibility moving forward due to overall inflationary pressures.

Selling, general and administrative expenses – SG&A expenses were approximately $3.4 million and $5.8 million for the six months ended September 30, 2022 and September 30, 2021 respectively.

The decrease of $2.4 million is attributed to an adjustment of one-time expenses, and a reduction of legal and marketing expenses.

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 R&D expenses increased by approximately $1.4 million or 200% to $2.1 million during the six months ended September 30, 2022, from approximately $720 thousand during the six months ended September 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 the Phase 2 trial commences with patient sign ups.

Impairment of investment – During the three month ended June 30, 2022, there was no impairment of investment.

During the three month ended June 30, 2021, the Company decided to dispose of its holding in and exit the acquisition of Evolve I.

As a result, Company impaired the investment of $37 thousand in the three months ended June 30, 2021.

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 June 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.

We anticipate additional R&D expenses as the Phase 2 trial commences with patient sign-ups.

Impairment of investment – During the six months ended September 30, 2022, there was no investment impairment.

However, during the six months ended September 30, 2021, the Company decided to dispose of its holding in and exit the acquisition of Evolve I, Inc.

As a result, Company impaired the investment of $37 thousand in the six months ended September 30, 2021.

| September 30, 2022, Form 10-Q

Other income, net – Other net income decreased by approximately $384 thousand or 86% during the six months ended September 30, 2022.

As a result, the total other income for the six months ended September 30, 2022, and 2021 is approximately $63 thousand and $447 thousand, respectively.

During the six months ended September 30, 2021, the other income included a one-time income of approximately $430 thousand related to the forgiveness of the PPP Note.

Other income includes interest and rental income, dividend income, profit from sale of assets, unrealized gains from investments, net income, and income from scrap sales.

Liquidity and Capital Resources

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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.

While the Company believes its existing balances of cash, cash equivalents and short term investments, 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, and workforce.

Please refer to Item 1A.

“Risk Factors” for further information on the risks related to the Company.

Please refer to Item 1A “Risk Factors” of the Company’s 2022 Form 10-K for further information on the risks related to the Company.

(in thousands, unaudited)

June 30, 2022

September 30, 2022

March 31, 2022

2 unchanged sentences

Working capital

| June 30, 2022, Form 10-Q

Cash and cash equivalents

Cash and cash equivalents decreased by approximately $2.4 million to $8 million in the three months ended June 30, 2022, from $10.4 million as of March 31, 2022, a decrease of approximately 23%.

The major decrease was due to approximately $158 thousand in purchase of property, plant, and equipment and acquisition of intangible assets and approximately $2.2 million of net cash loss.

Cash and cash equivalents decreased by approximately $3.8 million to $6.6 million in the six months ended September 30, 2022, from $10.4 million as of March 31, 2022, a decrease of approximately 37%.

Summary of Cash flows

(in thousands, unaudited)

Three months ended June 30,

Six months ended September 30,

Percent Change

Cash used in operating activities

Cash used in investing activities

Cash (used in)/provided by financing activities

Cash (used in)/ provided by investing activities

Cash provided by financing activities

Effects of exchange rate changes on cash and cash equivalents

2 unchanged sentences

Cash and cash equivalents at the end of the period

| September 30, 2022, Form 10-Q

Operating Activities

Net cash used in operating activities for the three months ended June 30, 2022, was approximately $2.2 million.

It consists of a net loss of approximately $2.8 million, a positive impact on cash due to non-cash expenses of approximately $1.4 million, and a negative changes in operating assets and liabilities of approximately $793 thousand.

Non-cash expenses consist of an amortization/depreciation charge of approximately $162 thousand and stock-based expenses of approximately $1.2 million.

In addition, changes in operating assets and liabilities had a negative impact of approximately $793 thousand on cash, of which approximately $258 thousand is due to decrease in accrued and other liabilities and approximately $524 thousand decrease in accounts payable.

Net cash used in operating activities for the three months ended June 30, 2021, was approximately $1.9 million.

It consists of a net loss of approximately $1.8 million, a negative impact on cash due to non-cash expenses of approximately $110 thousand, and changes in operating assets and liabilities of approximately $48 thousand.

Non-cash expenses consist of an amortization/depreciation charge of approximately $157 thousand, stock-based expenses of approximately $125 thousand, and a gain due to forgiveness of PPP Note of $430 thousand.

In addition, changes in operating assets and liabilities had a positive impact of approximately $48 thousand on cash, of which approximately $46 thousand is due to decrease in accrued and other liabilities and operating lease assets.

Net cash used in operating activities for the six months ended September 30, 2022, was approximately $3.8 million.

It consists of a net loss of approximately $5.2 million, a positive impact on cash due to non-cash expenses of approximately $2.2 million, and a negative change in operating assets and liabilities of approximately $808 thousand.

Non-cash expenses consist of an amortization/depreciation charge of approximately $332 thousand, stock-based expenses of approximately $1.8 million, and net loss on the sale of a fixed asset of approximately $45 thousand.

In addition, changes in operating assets and liabilities had a negative impact of approximately $808 thousand on cash, of which approximately $65 thousand is due to a decrease in accounts receivables, approximately $524 thousand decrease in accounts payable, and approximately $219 thousand decrease in other net current assets and liabilities.

Net cash used in operating activities for the six months ended September 30, 2021, was approximately $4.1 million.

It consists of a net loss of approximately $6 million, a positive impact on cash due to non-cash expenses of approximately $2.2 million, and a negative change in operating assets and liabilities of approximately $215 thousand.

Non-cash expenses consist of an amortization/depreciation charge of approximately $320 thousand, stock-based expenses of approximately $549 thousand, and a gain due to forgiveness of the PPP Note of $430 thousand.

In addition, changes in operating assets and liabilities had a negative impact of approximately $215 thousand on cash, of which approximately $150 thousand is due to a decrease in deposits and advances, approximately $56 thousand decrease in accounts payable, and approximately $9 thousand decrease in other net current assets and liabilities.

Investing Activities

Net cash used in investing activities for the three months ended 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.

Net cash provided by investing activities for the six months ended September 30, 2022, was approximately $24 thousand, which comprised proceeds from the sale of property, plant, and equipment of approximately $277 thousand, adjusted with cash expenses of approximately $60 thousand for the acquisition and filing expenses related to patents and approximately $193 thousand of a short-term investment.

Net cash used in investing activities for the six months ended September 30, 2021, was approximately $140 thousand, which comprised expenses of approximately $15 thousand for the acquisition and filing expenses related to patents and purchase of property, plant, and equipment of approximately $125 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

Net cash provided by financing activities from the issuance of equity stock through our ATM offering, net of all expenses related to the issuance of stock, was approximately $101 thousand and $4.1 million for the six months ended September 30, 2022, and 2021, respectively.

| September 30, 2022, Form 10-Q

Off-Balance Sheet Arrangements

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Our management believes the policies that fall within this category are the policies on revenue recognition, inventory, accounts receivable, foreign currency translation, impairment of long-lived assets and investments, stock-based compensation, and cybersecurity.

We have a cybersecurity policy in place and have taken cybersecurity measures that, although there can be no assurance, we expect are likely to safeguard the Company against breaches.

There were no impactful breaches in cybersecurity during the three months ended June 30, 2022.

Please see our disclosures in Note 2 – Summary of Significant Accounting Policies to the Notes to the Unaudited Condensed Consolidated Financial Statements in this report, in the Notes to the Audited Consolidated Financial Statements in the 2022 Form 10-K, as well as Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2022 Form 10-K, for a discussion of all our critical and significant accounting policies.

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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 in the Notes to the Audited Consolidated Financial Statements in Part II of our 2022 Form 10-K.

| June 30, 2022, Form 10-Q

| September 30, 2022, Form 10-Q

Quantitative and Qualitative Disclosures about Market Risk

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements