What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-02-14 compared with 2022-11-01 · 218 added, 223 removed, 664 unchanged (40% of the section changed)

3 unchanged sentences

(in thousands, except share data)

September 30,

Current assets:

4 unchanged sentences

Total current assets

Non-current assets:

Intangible assets, net

2 unchanged sentences

Operating lease asset

Total long-term assets

Total non-current assets

LIABILITIES AND STOCKHOLDERS ’ EQUITY:

3 unchanged sentences

Total current liabilities

Non-current liabilities:

Long-term loans

6 unchanged sentences

Preferred stock, $ 0.0001 par value:

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

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

Common stock and additional paid-in capital, $ 0.0001 par value:

150,000,000 shares authorized;

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

53,077,436 and 51,054,017 shares issued and outstanding as of December 31, 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.

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

India Globalization Capital, Inc.

2 unchanged sentences

Three months ended

September 30,

Six months ended

September 30,

Nine months ended

Cost of revenue

13 unchanged sentences

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

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

India Globalization Capital, Inc.

1 unchanged sentence

(in thousands)

Three months ended September 30, 2021

Three months ended December 31, 2021

Common Shares

4 unchanged sentences

Total Stockholders’

Balances as of June 30, 2021

Balances as of September 30, 2021

Common stock-based compensation & expenses, net

1 unchanged sentence

Foreign currency translation adjustments

Balances as of December 31, 2021

Three months ended December 31, 2022

Balances as of September 30, 2022

Three months ended September 30, 2022

Balances as of June 30, 2022

Common stock-based compensation & expenses, net

1 unchanged sentence

Foreign currency translation adjustments

Balances as of September 30, 2022

Six months ended September 30, 2021

Balances as of December 31, 2022

Nine months ended December 31, 2021

Common Shares

9 unchanged sentences

Foreign currency translation adjustments

Balances as of September 30, 2021

Six months ended September 30, 2022

Balances as of December 31, 2021

Nine months ended December 31, 2022

Balances as of March 31, 2022

2 unchanged sentences

Foreign currency translation adjustments

Balances as of September 30, 2022

Balances as of December 31, 2022

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

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

India Globalization Capital, Inc.

1 unchanged sentence

(in thousands)

Six months Ended

September 30,

Nine months Ended

Cash flows from operating activities:

4 unchanged sentences

Common stock-based compensation and expenses, net

Net loss on sale of fixed asset

Net loss on sale of property, plant, and equipment

Forgiveness of PPP Loan

Changes in operating assets and liabilities:

Accounts receivables, net

7 unchanged sentences

Cash flow from investing activities:

Net purchase of property, plant, and equipment

Net sale/(purchase) of property, plant, and equipment

Investment in short term investments

10 unchanged sentences

Supplementary information:

Cash paid for interest

Non-cash items:

1 unchanged sentence

Forgiveness of PPP Loan

Amortization of operating lease

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

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

India Globalization Capital, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE AND SIX MONTHS ENDED SEPTEMBER 30, 2022

THREE AND NINE MONTHS ENDED DECEMBER 31, 2022

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

Unless the context requires otherwise, all references in this report to “ IGC, ” “ the Company, ” “ we, ” “ our ” and/or “ us ” refer to India Globalization Capital, Inc., together with our subsidiaries and beneficially owned subsidiary.

Unless the context requires otherwise, all references in this report to “ IGC, ” “ the Company, ” “ we, ” “ our ” and/or “ us ” refer to India Globalization Capital, Inc., dba IGC Inc., together with our subsidiaries and beneficially owned subsidiary.

Our public filings with the Securities and Exchange Commission, the “ SEC ,” are available on www.sec.gov.

3 unchanged sentences

Corporate History

IGC has two business segments:

Infrastructure and Life Sciences.

We are a Maryland corporation established in 2005.

India Globalization Capital, Inc.

(dba IGC, Inc., IGC) is 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.

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.

Business Overview

IGC develops advanced formulations for treating diseases and conditions, including Alzheimer’s disease (AD), menstrual cramps (dysmenorrhea), premenstrual syndrome (PMS) and chronic pain.

The Company’s leading drug candidate, IGC-AD1, has demonstrated in Alzheimer’s cell lines the potential to be effective in suppressing or ameliorating two key hallmarks of AD:

plaques and tangles.

IGC-AD1 is currently in a Phase 2B safety and efficacy clinical trial for agitation in dementia from Alzheimer’s (clinicaltrials.gov, NCT05543681).

The Company markets two wellness brands Holief and Sunday Seltzer.

Holief includes pain relief creams and gels for women experiencing PMS and menstrual cramps, and Sunday Seltzer, a lifestyle energy beverage brand.

The Company currently has two main investigational small molecules in various stages of development:

IGC-AD1, our lead therapeutic candidate, is a tetrahydrocannabinol (THC) based formulation that has demonstrated in AD cell lines, in vitro, the potential in reducing a key peptide responsible for Aβ plaques, and the potential to decrease or inhibit the phosphorylation of tau a protein that is responsible for the formation of neurofibrillary tangles, both important hallmarks of AD.

In addition, in the Phase 1 human trial it demonstrated the potential to reduce agitation in dementia due to AD.

IGC-AD1 is currently in Phase 2B trials for treating agitation in dementia from AD, a condition that affects over 10-million individuals in North America and Europe, and

TGR-63, a non-cannabinoid molecule, is an enzyme inhibitor shown in pre-clinical trials to reduce neurotoxicity in Alzheimer’s cell lines.

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

The Company’s various personal care CBD-based over the counter (“OTC”) consumer products are sold through online and wholesale channels under the following two brands:

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”).

3 unchanged sentences

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

| September 30, 2022, Form 10-Q

The Company operates two segments:

the Life Sciences segment described above and a legacy Infrastructure segment to execute construction contracts and the rental of heavy construction equipment in India.

The Company is currently actively executing a project in this segment.

| December 31, 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.

The Company commenced its Phase 2 clinical trial on IGC-AD1 for agitation in dementia from Alzheimer’s at two U.

The Company also received a no-objection letter from Health Canada to begin trials in Canada and has commenced trials at a site in Montreal.

The trial is intended to enroll 146 patients with one half, the treated group, receiving IGC-AD1, and the other half, the control group, receiving a placebo.

The goal of the trial is to evaluate and establish the efficacy of IGC-AD1 in treating patients with Alzheimer’s dementia to reduce neuropsychiatric symptoms (“NPS”) such as agitation, which affects 76% of individuals with Alzheimer’s (Mussele et al., 2015).

The Company hopes to be the first natural tetrahydrocannabinol (“THC”) based medication for treating agitation in dementia from Alzheimer’s.

The trial is registered on clinicaltrials.gov with NCT05543681.

Business Organization

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

As of December 31, 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).

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

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

The Company is a Maryland corporation, established in 2005.

2 unchanged sentences

Basis of presentation

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 accompanying condensed consolidated balance sheet as of December 31, 2022, and March 31, 2022, condensed consolidated statements of operations for the three months and nine months ended December 31, 2022, and 2021, and condensed consolidated statements of changes in stockholders’ deficit for the three months and nine months ended December 31, 2022, and 2021, and condensed consolidated statements of cash flows for the nine months ended December 31, 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.

13 unchanged sentences

Actual results could differ from those estimates.

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

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

3 unchanged sentences

future obligations under employee benefit plans;

the useful lives of property, plant equipment;

the useful lives of property, plant, and equipment;

intangible assets;

24 unchanged sentences

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 six months ended September 30, 2022, and 2021.

No impairment has been recorded for the nine months ended December 31, 2022, and 2021.

Short-term and long-term investments

7 unchanged sentences

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

| September 30, 2022, Form 10-Q

| December 31, 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.

14 unchanged sentences

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.

As of December 31, 2022, the Company has approximately $ 88 thousand in short-term investments.

Stock – based compensation

16 unchanged sentences

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

We had $ 251 thousand of accounts receivable, net of provision for the doubtful debt of $ 35 thousand as of December 31, 2022, as compared to $ 125 thousand of accounts receivable, net of provision for the doubtful debt of $ 93 thousand as of March 31, 2022.

| December 31, 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.

12 unchanged sentences

Earnings/(Loss) per share

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.

The computation of basic loss per share for the nine months ended December 31, 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 nine months ended December 31, 2022, and 2021, used for the computation of basic earnings per share (“EPS”), is 52,412,830 and 49,643,942 , respectively.

Due to the loss incurred by the Company during the nine months ended December 31, 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 six months ended September 30, 2022, there were no impactful breaches in cybersecurity.

| September 30, 2022, Form 10-Q

In the nine months ended December 31, 2022, there were no impactful breaches in cybersecurity.

| December 31, 2022, Form 10-Q

Intangible assets

6 unchanged sentences

In addition, intangible assets will be tested on an interim basis if an event or circumstance indicates that it is more likely than not that an impairment loss has been incurred.

The Company has analyzed a variety of factors in light of the known impact to date of the COVID-19 pandemic on its business to determine if a circumstance could trigger an impairment loss, and, at this time and based on the information presently known, does not believe it is more likely than not that an impairment loss has been incurred.

Intangible assets with finite useful lives are amortized using the straight-line method over their estimated period of benefit.

22 unchanged sentences

The royalty income from licensing is recognized once goods have been sold by the processor to its customers.

| 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:

| December 31, 2022, Form 10-Q

Net sales disaggregated by significant products and services for the nine months ended December 31, 2022, and 2021 are as follows:

(in thousands)

Six months ended September 30,

Nine months ended December 31,

Infrastructure segment

23 unchanged sentences

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

| December 31, 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 September 30, 2022.

There was no impairment for right-of-use lease assets as of December 31, 2022.

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

10 unchanged sentences

(in thousands)

September 30, 2022

December 31, 2022

March 31, 2022

4 unchanged sentences

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).

| December 31, 2022, Form 10-Q

During the nine months ended December 31, 2022, the Company wrote off approximately $ 110 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)

September 30, 2022

December 31, 2022

March 31, 2022

2 unchanged sentences

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)

September 30, 2022

December 31, 2022

Amortized intangible assets

9 unchanged sentences

The amortization of patent and patent rights with finite life is up to 20 years, commencing from the date of grant or acquisition.

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.

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 September 30, 2022, there was no impairment.

Accordingly, the amortization expense in the three months ended December 31, 2022, and 2021 amounted to approximately $ 14 thousand and $ 7 thousand, respectively, whereas the amortization expense in the nine months ended December 31, 2022, and 2021 amounted to approximately $ 38 thousand and $ 18 thousand, respectively.

Estimated amortization expense

5 unchanged sentences

For the year ended 2028

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT

1 unchanged sentence

Useful Life (years)

September 30, 2022

December 31, 2022

March 31, 2022

8 unchanged sentences

Total property, plant, and equipment, net

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.

The depreciation expense in the three months ended December 31, 2022, and 2021 amounted to approximately $ 158 thousand and $ 117 thousand, respectively.

The depreciation expense in the nine months ended December 31, 2022, and 2021 amounted to approximately $ 466 thousand and $ 427 thousand, respectively.

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

As of December 31, 2022, the Company disposed of fully depreciated assets in the amount of approximately $ 1.6 million from 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.

4 unchanged sentences

(in thousands)

September 30, 2022

December 31, 2022

March 31, 2022

4 unchanged sentences

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

| September 30, 2022, Form 10-Q

| December 31, 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 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 total short-term lease expense and cash paid for the nine months ended December 31, 2022, and 2021 are approximately $ 134 thousand and $ 131 thousand, respectively.

The Company also has four operating leases as of December 31, 2022.

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

12 unchanged sentences

Three months ended

September 30, 2022

December 31, 2022

(in thousands)

September 30, 2021

December 31, 2021

(in thousands)

Six months ended

September 30, 2022

Nine months ended

December 31, 2022

(in thousands)

Six months ended

September 30, 2021

Nine months ended

December 31, 2021

Operating lease costs

4 unchanged sentences

(in thousands)

September 30, 2022

December 31, 2022

March 31, 2022

6 unchanged sentences

Total lease liability

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

(in thousands)

September 30, 2022

December 31, 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 September 30, 2022, the following table summarizes the maturity of our lease liabilities:

As of December 31, 2022, the following table summarizes the maturity of our lease liabilities:

Present value discount

2 unchanged sentences

(in thousands)

September 30, 2022

December 31, 2022

March 31, 2022

5 unchanged sentences

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.

Other current liability also includes statutory payables of approximately $ 48 thousand and $ 55 thousand as of December 31, 2022 and March 31, 2022, respectively and approximately $ 3 thousand of short-term loans as of December 31, 2022, and March 31, 2022, respectively.

NOTE 11 – LOANS AND OTHER LIABILITIES

Loan as of September 30, 2022:

Loan as of December 31, 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 %.

3 unchanged sentences

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

For the nine months ended December 31, 2022, the interest expense and principal payment for the EIDL were approximately $ 4.1 thousand and $ 2 thousand, respectively.

For the nine months ended December 31, 2021, the interest expense and principal payment for the EIDL were approximately $ 3.2 thousand and $ 2 thousand, respectively.

As of December 31, 2022, approximately $ 141 thousand of the loan is classified as long-term loans and approximately $ 3 thousand as short-term loans.

| December 31, 2022, Form 10-Q

Other Liability:

(in thousands)

September 30, 2022

December 31, 2022

March 31, 2022

4 unchanged sentences

Such matters are subject to many uncertainties, and outcomes are not predictable with assurance.

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.

Accordingly, no such matters that are deemed material to the condensed consolidated financial statements as of December 31, 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.

5 unchanged sentences

NOTE 13 – SECURITIES

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.

As of December 31, 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 53,077,436 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 December 31, 2022.

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

5 unchanged sentences

NOTE 14 – STOCK-BASED COMPENSATION

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.

As of December 31, 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.

1 unchanged sentence

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

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

| December 31, 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.

6 unchanged sentences

Expected dividend yield

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 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.

For the nine months ended December 31, 2022, the Company’s share-based and option-based expenses shown in SG&A expenses (including research and development) were $ 2.2 million and $ 23 thousand, respectively.

For the nine months ended December 31, 2021, the Company’s share-based and option-based expenses were $ 1.0 million thousand and $ 24 thousand, respectively.

Non-vested shares

4 unchanged sentences

Cancelled/forfeited

Non-vested shares as of September 30, 2022

Non-vested shares as of December 31, 2022

(in thousands)

5 unchanged sentences

Cancelled/forfeited

Options outstanding as of September 30, 2022

Options outstanding as of December 31, 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

| December 31, 2022, Form 10-Q

NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS

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.

As of December 31, 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.

3 unchanged sentences

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

The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of December 31, 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 December 31, 2022

(in thousands)

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Certificate of Deposits

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

NOTE 16 – SEGMENT INFORMATION

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(in thousands)

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

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

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

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(India, Hong Kong, and Colombia)

September 30, 2022

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Intangible assets, net

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None to report.

| September 30, 2022, Form 10-Q

| December 31, 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.

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 purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide an understanding of India Globalization Capital, Inc.’s, dba IGC Inc.

(“IGC,” “the Company,” “we,” “our,” and/or “us”), consolidated financial condition and results of operations and cash flows.

The MD&A 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 nine months ended December 31, 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.

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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.

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;

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 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”).

Business Overview

IGC develops advanced formulations for treating diseases and conditions, including Alzheimer’s disease (AD), menstrual cramps (dysmenorrhea), premenstrual syndrome (PMS) and chronic pain.

The Company’s leading drug candidate, IGC-AD1, has demonstrated in Alzheimer’s cell lines the potential to be effective in suppressing or ameliorating two key hallmarks of AD:

plaques and tangles.

IGC-AD1 is currently in a Phase 2B safety and efficacy clinical trial for agitation in dementia from AD (clinicaltrials.gov, NCT05543681).

The Company also has lines of various cannabinol (CBD) based consumer products such as Holief, which includes gummies and pain relief creams for women experiencing PMS and menstrual cramps, and Sunday Seltzer, which includes a CBD-infused energy beverage, all currently available for purchase.

The Company currently has two main investigational small molecules in various stages of development:

IGC-AD1, our lead therapeutic candidate, is a THC based formulation that has demonstrated in AD cell lines, in vitro, the potential in reducing a key peptide responsible for Aβ plaques, and the potential to decrease or inhibit the phosphorylation of tau a protein that is responsible for the formation of neurofibrillary tangles, both key hallmarks of AD.

In addition, in the Phase 1 human trial it demonstrated the potential to reduce agitation in dementia due to AD.

IGC-AD1 is currently in Phase 2B trials for treating agitation in dementia from AD, a condition that affects over 10-million individuals in North America and Europe, and

TGR-63, a non-cannabinoid molecule, is an enzyme inhibitor shown in pre-clinical trials to reduce neurotoxicity in Alzheimer’s cell lines.

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

The Company’s various personal care CBD-based over the counter (“OTC”) consumer products are sold through online and wholesale channels under the following two brands:

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 period cramp discomforts and other PMS symptoms.

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.

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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.

IGC operates two segments:

the Life Sciences segment described above and a legacy Infrastructure segment to execute construction contracts and the rental of heavy construction equipment in India.

The Company is currently actively executing a project in this segment.

| December 31, 2022, Form 10-Q

Other Developments

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 Company commenced its Phase 2 clinical trial for agitation in dementia from Alzheimer’s at two U.S.

sites and one Canadian site with plans to add between five to ten additional sites in the United States, Canada, and possibly South America to increase population diversity, promoting both the inclusion of underrepresented populations and helping the Company to better understand the impact of IGC-AD1 on the population of the Americas.

The trial is intended to enroll 146 patients with one half, the treated group, receiving IGC-AD1, and the other half, the control group, receiving a placebo.

The Company hopes to be the first natural THC based medication to treat agitation in dementia due to Alzheimer’s.

The Life Sciences segment strategy includes:

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While there can be no assurance, we believe this strategy can improve our existing products and lead to the creation of new hemp-based products that can provide treatment options for multiple conditions, symptoms, and side effects.

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

Our Infrastructure segment strategy entails executing the current construction contracts that are in effect.

COVID-19 Update

Our infrastructure business is based in the state of Kerala, India, which is among the Indian states most affected by COVID-19, and Hong Kong with strict quarantine and travel restrictions.

The restrictions continue to adversely impact our infrastructure business, financial condition, liquidity, and operations.

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

Our infrastructure business is based in the state of Kerala, India.

COVID-19 has had and continues to have, a significant impact around the world, prompting governments and businesses to take unprecedented measures in response.

The Company continues to monitor the situation and take appropriate action.

The extent to which the COVID-19 pandemic may impact the Company’s operational and financial performance remains uncertain and will depend on many factors outside the Company’s control.

Additional future impacts on the Company may include material adverse effects on demand for the Company’s products and services.

| December 31, 2022, Form 10-Q

Results of Operations for the Three Months Ended December 31, 2022, and December 31, 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 September 30, 2022, and September 30, 2021:

The following table presents an overview of our results of operations for the three months ended December 31, 2022, and December 31, 2021:

Statement of Operations (in thousands, unaudited)

Three months ended September 30,

Three months ended

Cost of revenue

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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 – Revenue was approximately $332 thousand and $142 thousand for the three months ended December 31, 2022, and December 31, 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.

The Infrastructure segment revenue was approximately $41 thousand and $8 thousand for the three months ended December 31, 2022, and December 31, 2021, respectively.

The increase in revenue derived from the Infrastructure segment relates to progress in construction activity.

Cost of revenue – The cost of revenue amounted to approximately $230 thousand for the three months ended December 31, 2022, compared to $80 thousand in the three months ended December 31, 2021, this represents gross margins of 31% and 44%, respectively.

The change in the cost of revenue is primarily attributable to the cost of raw materials required to produce our products and the cost related to low margin Infrastructure revenue.

Selling, general and administrative expenses (“SG&A”) – SG&A expenses were approximately $1.5 million and $2.07 million for the three months ended December 31, 2022, and December 31, 2021, respectively.

The decrease of $496 thousand is attributed to a reduction of compensation, 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 R&D expenses increased by approximately $429 thousand, or 114%, to $806 thousand during the three months ended December 31, 2022, from approximately $377 thousand during the three months ended December 31, 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

We anticipate increased R&D expenses as the development of TGR-63 and the Phase 2 trial on Alzheimer’s pick up more momentum.

| December 31, 2022, Form 10-Q

Results of Operations for the Nine Months Ended December 31, 2022, and December 31, 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:

The following table presents an overview of our results of operations for the nine months ended December 31, 2022, and December 31, 2021:

Statement of Operations (in thousands, unaudited)

Six months ended September 30,

Nine months ended

Cost of revenue

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Income tax expense/benefit

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

Revenue – Revenue was approximately $745 thousand and $275 thousand for the nine months ended December 31, 2022, and December 31, 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.

The Infrastructure segment revenue was approximately $59 thousand and $26 thousand for the nine months ended December 31, 2022, and December 31, 2021, respectively.

The increase in revenue derived from the Infrastructure segment relates to progress on the construction activity.

Cost of revenue – The cost of revenue amounted to approximately $366 thousand for the nine months ended December 31, 2022, compared to $149 thousand in the nine months ended December 31, 2021, this represents gross margins of 51% and 46%, respectively.

The change in cost of revenue is primarily attributable to the cost of raw materials required to produce our products and the cost related to low margin Infrastructure revenue.

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.

Selling, general and administrative expenses – SG&A expenses were approximately $5 million and $7.96 million for the nine months ended December 31, 2022, and December 31, 2021, respectively.

The decrease of $3 million is attributed to an adjustment of one-time expenses and a reduction of compensation, 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 $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 R&D expenses increased by approximately $1.8 million or 171% to $2.9 million during the nine months ended December 31, 2022, from approximately $1.1 million during the nine months ended December 31, 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 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.

Impairment of investment – During the nine months ended December 31, 2022, there was no investment impairment.

However, during the nine months ended December 31, 2021, the Company exited its investment and acquisition of Evolve I, Inc.

The Company received shares of IGC common stock, which had granted to Evolve as consideration to the Share Subscription Agreement (SSA), in exchange for the return of its shareholding in Evolve.

Accordingly, the Company cancelled the IGC shares received by it and impaired its remaining investment of approximately $37 thousand.

| December 31, 2022, Form 10-Q

Other income, net – Other net income decreased by approximately $395 thousand or 88% during the nine months ended December 31, 2022.

As a result, the total other income for the nine months ended December 31, 2022, and 2021 is approximately $56 thousand and $451 thousand, respectively.

During the nine months ended December 31, 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.

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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 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.

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, and other asset classes, clinical trials, and other liquidity requirements, if any, associated with its existing operations over the short .

The Company expects to raise capital for its trials as and when it is able to do so, but there can be no assurance thereof.

In addition, there can be no assurance of the terms thereof and any subsequent equity financing sought may have dilutive effects on our current shareholders.

While there is no guarantee that we will be successful, we are applying to non-dilutive funding opportunities such as Small Business Research and Development programs.

In addition, subject to limitations on the amount of capital that can be raised, the Company expects to utilize its shelf registration on statement on Form S-3 to raise capital through at-the-market Offerings or otherwise.

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)

September 30, 2022

December 31, 2022

March 31, 2022

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Cash and cash equivalents

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%.

Cash and cash equivalents decreased by approximately $5.5 million to approximately $5 million in the nine months ended December 31, 2022, from $10.4 million as of March 31, 2022, a decrease of approximately 53%.

Summary of Cash flows

(in thousands, unaudited)

Six months ended September 30,

Nine months ended

Percent Change

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Cash and cash equivalents at the end of the period

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

Operating Activities

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.

Net cash used in operating activities for the nine months ended December 31, 2022, was approximately $5.5 million.

It consists of a net loss of approximately $7.5 million, a positive impact on cash due to non-cash expenses of approximately $2.8 million, and a negative change in operating assets and liabilities of approximately $856 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.

Non-cash expenses consist of an amortization and depreciation charge of approximately $504 thousand, stock-based expenses of approximately $2.3 million, and net loss on the sale of a property, plant, and equipment of approximately $39 thousand.

In addition, changes in operating assets and liabilities had a negative impact of approximately $856 thousand on cash, of which approximately $127 thousand is due to a decrease in accounts receivables, approximately $572 thousand decrease in accrued and other liabilities, and approximately $157 thousand decrease in other net current assets and liabilities.

Net cash used in operating activities for the nine months ended December 31, 2021, was approximately $6.6 million.

This consists of a net loss of approximately $8.5 million and non-cash items totaling approximately $2.89 million, which in turn consist of an amortization and depreciation charge of approximately $486 thousand, stock-based expenses totaling approximately $1.1 million, approximately $1.7 million for a provision related to stolen inventory, approximately $37 thousand related to the impairment of investment and gain due to forgiveness of the PPP Note of approximately $430 thousand.

Changes in operating assets and liabilities had a net negative impact of approximately $944 thousand on cash, of which approximately $51 thousand is related to inventory.

Investing Activities

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.

Net cash provided by investing activities for the nine months ended December 31, 2022, was approximately $7 thousand, which comprised net proceeds from the sale of property, plant, and equipment of approximately $239 thousand, adjusted with cash expenses of approximately $144 thousand for the acquisition and filing expenses related to patents and approximately $88 thousand of a short-term investment.

Net cash used in investing activities for the nine months ended December 31, 2021, was approximately $189 thousand, which comprised expenses of approximately $37 thousand for the acquisition and filing expenses related to patents and purchase of property, plant, and equipment of approximately $152 thousand.

Financing Activities

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

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 nine months ended December 31, 2022, and 2021, respectively.

| December 31, 2022, Form 10-Q

Off-Balance Sheet Arrangements

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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.

| September 30, 2022, Form 10-Q

| December 31, 2022, Form 10-Q

Quantitative and Qualitative Disclosures about Market Risk

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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