Item 5. Market for Registrant’s Common Equity
ITEM 5. MARKET FOR REGISTRANT ’ S
COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
Our common stock is listed
on the NYSE American under “IGC” symbol with CUSIP number 45408X308. The common stock of the Company is also quoted on the
Frankfurt, Berlin, and Stuttgart (XETRA2) stock exchanges in Germany (ticker symbol: IGS1). We also have 91,472 units outstanding that
can be separated into common stock. Ten units may be separated into one share of common stock. The unit holders are requested to contact
the Company or our transfer agent, Continental Stock Transfer & Trust, to separate their units into common stock.
Further information on the
securities can be referred to in Note 13, “Securities” of Part II, Item 8.
Securities authorized for issuance under equity compensation plans
The following table shows,
as of March 31, 2025, information regarding outstanding awards available under our compensation plans (including individual compensation
arrangements) under which our equity securities may be delivered.
Plan category
(a)
Number of
securities
to be
issued upon
exercise of
outstanding
options,
warrants
and
rights
(in thousands)
(b)
Weighted-
average
exercise
price of
outstanding
options,
warrants and
rights
(c)
Number of
securities
available for
future
issuance
(excluding
shares in
column (a)
(in thousands)
Equity compensation plans approved by security holders:
2018 Omnibus Incentive Plan (1)
2,106
$
0.34
1,821
Special Grant (2)
9,203
$
0.51
4,224
(1) Consists of our 2018 Omnibus Incentive Plans, as approved by our stockholders on November 8, 2017. See
Note 14, “Stock-Based Compensation” of the Notes to the Consolidated Financial Statements included in this report.
(2) Consists of 2 million shares as a special grant of common stock, as approved by our stockholders on January
7, 2020, 2.5 million shares as a special grant of common stock, as approved by our stockholders on January 11, 2021, 3.5 million shares
as a special grant of common stock, as approved by our stockholders on October 15, 2021, 3 million shares as a special grant of common
stock, as approved by stockholders on September 9, 2022, 3 million shares as special grant of common stock, as approved by stockholders
on August 18, 2023 and 5 million shares as special grant of common stock, as approved by stockholders on August 23, 2024.
Holders of Record
As of June 20, 2025, we had
approximately 46 registered shareholders of record of our common stock and 2 registered unit holders. The number of record holders does
not include persons who held our common stock in nominee or “street name” accounts through brokers. Continental Stock Transfer
& Trust Company is the transfer agent and registrar for our common stock.
Dividend policy
We have not declared or paid
any dividends on our common stock. We currently anticipate that we will retain future earnings, if any, for the development, operation,
and expansion of our business and do not anticipate declaring or paying any dividends in the foreseeable future. Any future determinations
related to the dividend policy will be made at the discretion of our Board of Directors.
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Unregistered sales of equity securities
In the first quarter of Fiscal
2026, the Company entered into a Share Purchase Agreement (the 2025 SPA) with multiple investors, relating to the sale and issuance by
our company to investors of an aggregate of 2,803,333 shares of our common stock, for a total purchase price of $841,000, or $0.30 per
share, subject to the terms and conditions set forth in the 2025 SPA. The investment is subject to customary closing conditions, including
NYSE approval. As per the 2025 SPA, the investor received piggyback registration rights subject to certain restrictions. Shares are intended
to be exempt from registration under the Securities Act, by virtue of the provisions of Section 4(a)(2) of Securities Act.
Purchases of equity securities by the issuer and affiliated purchasers
None.
ITEM 6. [RESERVED]
ITEM 7. MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion
and analysis of the consolidated statement of operations, liquidity, and capital resources, and a summary of cash flows, which apply to
Fiscal 2025, ending on March 31, 2025, and Fiscal 2024, ending on March 31, 2024. These statements should be read in conjunction with
our consolidated financial statements and the related notes that appear elsewhere in this Annual Report on Form 10-K.
In addition to historical
information, this report contains forward-looking statements that involve risks and uncertainties that may cause our actual results to
differ materially from the plans and results discussed in forward-looking statements. We encourage you to review the risks and uncertainties
discussed in the sections entitled Item 1A. “Risk Factors” and “Forward-Looking Statements” are included at the
beginning of this Annual Report on Form 10-K.
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.
Overview
IGC Pharma, a clinical-stage
pharmaceutical company developing treatments for Alzheimer’s disease (AD) and related neurodegenerative conditions, is committed
to transforming patient care by seeking to offer faster-acting and more effective solutions. The Company’s research and development
efforts are centered on addressing some of the most challenging and underserved symptoms of Alzheimer’s, with the lead investigational
candidate, IGC-AD1, positioned at the forefront of this strategy. It is designed to treat agitation in Alzheimer’s dementia, a common
and difficult-to-manage neuropsychiatric symptom that significantly impacts millions of patients’ well-being and caregiver burden.
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The Global Economic Environment
In addition to the industry-specific
factors, such as regulations around cannabinoid research, we are exposed to economic cycles. Factors in the global economic environment
that may impact our operations include, among other things, currency fluctuations, capital and exchange controls, global economic conditions
including inflation, restrictive government actions, changes in intellectual property, legal protections and remedies, trade regulations,
tax laws and regulations and procedures and actions affecting approval, production, pricing, and marketing of our products, as well as
impacts of political or civil unrest or military action, terrorist activity, unstable governments, and legal systems, inter-governmental
disputes, public health outbreaks, epidemics, pandemics, natural disasters or disruptions related to climate change.
Clinical Trial Operational Excellence
As part of our commitment
to operational discipline and patient-centric innovation, we continue to focus not only on the scientific rigor of our clinical trials
but also on their cost-effectiveness. For our Phase 2 trial of IGC-AD1, we have successfully optimized trial operations to bring the cost
per patient enrolled to approximately $70 thousand.
This represents a significant
improvement over industry norms for Alzheimer’s trials, where average per-patient costs can exceed $100 thousand to $150 thousand,
according to multiple industry benchmarks for mid-stage neurodegenerative clinical trials. These efficiencies reflect our strategic use
of:
●
In-house site selection, training of clinical sites, monitoring, audit, scientific, and clinical trial operations
●
In house regulatory and marketing to potential patients for each of the clinical trial sites
● Technology-enabled
patient recruitment and monitoring
By keeping trial costs below
market averages while maintaining robust clinical standards, we believe we are well-positioned to deliver high-quality data and extend
our cash runway, both critical to de-risking our development timeline and enhancing shareholder value, although there can be no assurance
thereof.
Clinical Trial Updates
● On
March 26, 2025, the Company announced additional positive interim results from its ongoing Phase 2 clinical trial on IGC-AD1, an investigational
treatment for agitation in dementia due to AD. The results suggest that IGC-AD1 may decrease the frequency and/or severity of
sleep disturbances and nighttime behaviors. Based on the interim analysis at week 2, sleep disturbance was reduced
by about 71% (p=.012) and at week 6, about 78% (p=.02) for those on the active medication. These values indicate a clinical
and statistically significant reduction in sleep disturbances among Alzheimer’s patients receiving the active medication
compared to placebo, as measured by the Neuropsychiatric Inventory (NPI-12) Sleep Subscale.
● During fiscal 2025, the Company
expanded the CALMA Phase 2 trial by adding 13 prestigious research sites, including Miami Jewish Health and Butler Hospital’s Memory
and Aging Program, to accelerate patient enrollment and diversify the study population.
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●
Based on the interim results, the secondary endpoint showed a clinically significant reduction, approaching statistical significance, in agitation in Alzheimer’s at week two compared to placebo. CMAI LS mean difference at week 2, assessing early response, was -12.19 with an ES of 0.79 (p= .071) .
Table 2:- Interim CMAI Results for Week
2 and Week 6
Week 2
Week 6 (EOT)
Scale
LS Mean Change (95% CI)
p value
Cohen’s d
LS Mean Change (95% CI)
p value
Cohen’s d
CMAI
-12.19 (-25.52, 1.14)
.071
0.79
-10.46 (-20.53, -0.4)
.042
0.79
Interim data from our Phase
2 trial of IGC-AD1 for agitation in Alzheimer’s disease show a statistically significant improvement in symptoms compared to placebo
over six weeks, as measured by the Cohen-Mansfield Agitation Inventory (CMAI). IGC-AD1 demonstrated a large effect size (Cohen’s
d = 0.79) and showed improvement as early as Week 2. For context, Brexpiprazole (Rexulti), the currently approved therapy showed separation
from placebo only by Week 6, based on published trial data.
In addition to efficacy, IGC-AD1 has shown a favorable safety profile
to date. As of the 6-week interim analysis:
● No
serious adverse events (SAEs) were reported
● No
adverse events (AEs) led to treatment discontinuation
● No
deaths occurred in the treatment or placebo arms
While cross-trial comparisons must be interpreted with caution due
to differences in trial design and patient populations, these findings suggest that IGC-AD1 may offer faster symptom relief with a potentially
improved safety profile compared to the currently approved therapy.
The Phase 2 trial remains ongoing to complete 146 patients.
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Business Updates
●
On January 21, 2025, the Company appointed Terry McAuliffe, the 72 nd Governor of Virginia, as a strategic advisor. Governor McAuliffe’s extensive leadership experience across public and private sectors will play a pivotal role in advancing IGC Pharma’s mission to redefine Alzheimer’s care and position for growth in the biotechnology and pharmaceutical industries.
●
Through Fiscal 2025 the Company raised over $4.64 million through different private equity placement SPAs and the ATM. Please refer to Note 13 – “Securities” for more information.
Results of Operations
Fiscal 2025 compared to Fiscal 2024
The following table presents an overview of our
results of operations for Fiscal 2025 and Fiscal 2024:
Statement of Operations (in thousands, audited)
Fiscal
2025
($)
2024
($)
Change
($)
Percent
Change
Revenue
1,271
1,345
(74
)
(6
)%
Cost of revenue
(652
)
(612
)
(40
)
7
%
Gross profit
619
733
(114
)
(16
)%
Selling, general, and administrative expenses
(4,410
)
(6,758
)
2,348
(35
)%
Research and development expenses
(3,655
)
(3,773
)
118
(3
)%
Operating loss
(7,446
)
(9,798
)
2,351
(24
)%
Impairment Loss on PPE
-
(3,345
)
3,345
(100
)%
Other income, net
325
143
182
127
%
Loss before income taxes
(7,121
)
(13,000
)
5,878
(45
)%
Income tax expense/benefit
-
-
-
-
Net loss attributable to common stockholders
(7,121
)
(13,000
)
5,878
(45
)%
Revenue – During
Fiscal 2025, the Company’s revenue decreased by $74 thousand from $1.3 million in Fiscal 2024 to $1.2 million in Fiscal 2025. The
primary source of revenue in both years was from the Life Sciences segment, encompassing the sale of our formulations as white-labeled
manufactured products, among others. Fiscal 2024, the Company also generated $164 thousand in revenue from the Infrastructure business.
However, in Fiscal 2025, revenue from Infrastructure was nil due to the completion of all infrastructure projects. Excluding Infrastructure,
revenue from the Life Sciences segment increased from $1181 thousand in Fiscal 2024 to $1271 thousand in Fiscal 2025. Our core focus is
on advancing IGC-AD1, the completion of the Phase 2 trial, and development of MINT-AD for early diagnosis of Alzheimer’s. In the
future, our revenue from white label may not increase as we allocate more resources to expanding our core pharma focused programs.
Cost of revenue –
The cost of revenue amounted to approximately $652 thousand for Fiscal 2025, compared to $612 thousand utin Fiscal 2024, this represents
a gross margin of 49% and 54%, respectively. The cost of revenue is primarily attributable to the cost of raw materials, labor, and other
direct overheads required to produce our products and services in both segments. The slight decrease in gross margin is attributed to
the Company’s strategic efforts to develop new formulations using a broader range of active ingredients, which, while affecting
margins in the short term, are expected to open new commercial avenues in the long term.
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Selling, general, and
administrative (SG&A) expenses –SG&A expenses primarily encompass various costs such as employee-related expenses,
sales commissions, professional fees, legal fees, marketing expenses, other corporate expenses, allocated general overhead,
provisions, depreciation, and write-offs related to doubtful accounts and advances. For Fiscal 2025, the Company reported SG&A
expenses of approximately $4.4 million, representing a decrease of approximately $2.3 million, or 35%, compared to the $6.7 million
recorded in Fiscal 2024. This significant decline in SG&A expenses is attributable to the Company’s focused efforts to
optimize corporate-level operational efficiency by lowering employee–related costs due to headcount alignment and compensation
restructuring, implementing better inventory management systems, and reducing spending on legal and professional services through
more efficient vendor management. In a demonstration of cost and cash discipline, management elected to convert approximately $750
thousand in accrued bonuses into performance-based compensation, payable only upon the achievement of defined business milestones,
which also align with shareholder interest. These optimizations allowed the Company to preserve capital and extend its operational
runway while maintaining the infrastructure necessary to support clinical development and strategic initiatives.
Research and Development
(R&D) expenses – R&D expenses were primarily associated with the Life Sciences segment, reflecting the Company’s
investment in R&D activities. In Fiscal 2025, the Company reported R&D expenses of approximately $3.7 million, representing
a decrease of $118 thousand or 3% compared to approximately $3.8 million in Fiscal 2024. The R&D expenses is primarily attributed
to the progression of Phase 2 trials on IGC-AD1 and pre-clinical studies on TGR-63, indicating the Company’s dedication to advancing
its product pipeline. As the development of TGR-63 and the Phase 2 trial on Alzheimer’s gains momentum, the Company anticipates
increase in R&D expenses.
Impairment loss on Property,
Plant, and Equipment (PPE) – During Fiscal 2025, there was no impairment loss on PPE. During Fiscal 2024, as the Company focused
on liquidating all non-operating assets to reduce the cost and generate cash, the Company impaired the land situated in Nagpur, India,
by approximately $3.3 million to $720 thousand from $4.1 million.
Other Income, net –
During Fiscal 2025, the Company reported approximately $325 thousand in other income, which represents an increase of approximately $182
thousand as compared to the $143 thousand recorded in Fiscal 2024. The increase in other income is attributable to the tax credit of $194
thousand.
Liquidity and capital resources
Our sources of liquidity are
cash and cash equivalents, funds raised through the ATM offering, cash flows from operations, short-term and long-term borrowings, and
short-term liquidity arrangements. The Company continues to evaluate various financing sources and options to raise working capital to
help fund current research and development programs and operations. The Company does not have any material long-term debt, capital lease
obligations, or other long-term liabilities except as disclosed in this report. Please refer to Note 12, “Commitments and contingencies”,
Note 11, “Loans and Other Liabilities,” and Note 9, “Leases” in Item 1 of this report for further information
on the Company’s commitments and contractual obligations.
Pursuant to the Master Loan
and Security Agreement (the Credit Agreement) with O-Bank, Co., Ltd., the Company successfully obtained a working capital credit facility
totaling $12 million and, in addition, raised approximately $4.64 million in exchange for approximately 14.2 million shares. The equity
and the credit facility serve to minimize ongoing liquidity requirements and ensure the Company’s ability to sustain its operations.
Furthermore, the Company intends to raise additional funds through private placement and ATM offerings, subject to market conditions,
although there can be no assurance that such financing efforts will be successful or as to any private placement or the terms of such
offering. Any equity issuances would be dilutive to shareholders. Please refer to Note 13 – “Securities”, for more information.
On July 29, 2024, the Company
entered into an amendment to extend the Credit Agreement, effective July 8, 2024. The amendment extends the term of the Credit Agreement,
which was set to expire, under the same terms and conditions as previously disclosed on the Company’s Current Report on Form 8-K
filed with the Securities Exchange Commission on July 7, 2023, with the exception of a reduction in the facility fees from $120,000 to
$84,000. All other material terms of the Loan Agreement remain unchanged.
As disclosed in Subsequent Events, on June 24, 2025, IGC Pharma, Inc.
(“IGC” or the “Company”) entered into an amendment to extend its existing Master Loan and Security Agreement along
with the General Banking Facility Letter (collectively called the “Loan Agreement”) with O-Bank, CO., LTD., a banking corporation
incorporated under the laws of Taiwan, as administrative agent and lender (the “Lender’), effective June 24, 2024. The amendment
extends the term of the Loan Agreement, which was set to expire, under the same terms and conditions as previously disclosed on the Company’s
Current Report on Form 8-K filed with the Securities Exchange Commission on August 2, 2024, with the exception of i) a reduction in the
facility fees from $84,000 to $48,000 and ii) interest, calculated according to the interest rate mentioned in the Certificate of Deposit,
as the case may be, plus an applicable margin of 1.2%, instead of 1% . All other material terms of the Loan Agreement remain unchanged.
On October 27, 2023, the Company
entered into a Sales Agreement (the Sales Agreement) with A.G.P./Alliance Global Partners (the Agent) pursuant to which the Company may
offer and sell, from time to time, through the Agent, as sales agent and/or principal, shares of its common stock having an aggregate
offering price of up to $60 million , subject to certain limitations on the amount of Common Stock that may be offered and sold by the
Company set forth in the Sales Agreement (the Offering). As of March 31, 2025 the Company has sold approximately $2.1 million, under the
Sales Agreement.
On March 22, 2024, the Company
entered into a Share Purchase Agreement (the March 2024 SPA) with Bradbury Strategic Investment Fund A, resulting in approximately $3
million in gross proceeds. During the quarter ended June 30, 2024, the Company issued approximately 8.8 million shares of unregistered
common stock at a price of $0.34 per share. Shares are intended to be exempt from registration under the Securities Act of 1933, as amended
(the Securities Act), by virtue of the provisions of Section 4(a)(2) of Securities Act and Regulation D and/or Regulation S adopted thereunder.
During fiscal 2024, the Company had received $500 thousand of the total $3 million due under the March 2024 SPA, while the remaining $2.5
million was received in, the Company has sold approximately $2.1 million April 2024. Please refer to Note 13 – “Securities”,
for more information.
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On
September 25, 2024, the Company entered into the 2024 Share Purchase Agreement (the “September 2024 SPA”) with Moran Global
Strategies, Inc., a Virginia corporation (“MGS”), which is owned by James Moran, a director of IGC, relating to the sale
and issuance by our company to the investors of an aggregate of 588,235 shares of our common stock, for a total purchase price of $200,000,
or $0.34 per share, subject to the terms and conditions set forth in the September 2024 SPA. The investment is subject to customary closing
conditions, including NYSE approval. As per the September 2024 SPA, the investor received piggyback registration rights subject to certain
restrictions. Shares are intended to be exempt from registration under the Securities Act by virtue of the provisions of Section 4(a)(2)
of Securities Act.
In
the first quarter of Fiscal 2026, the Company entered into the 2025 Share Purchase Agreement with multiple investors, relating to the
sale and issuance by our company to the investors of an aggregate of 2,803,333 shares of our common stock, for a total purchase price
of $841,000, or $0.30 per share, subject to the terms and conditions set forth in the 2025 SPA. The investment is subject to customary
closing conditions, including NYSE approval. As per the 2025 SPA, the investor received piggyback registration rights subject to certain
restrictions.
The
Company expects to raise capital for its trials as and when it is able to do so, but there can be no assurance thereof. In addition,
there can be no assurance of the terms thereof, and any subsequent equity financing sought may have dilutive effects on our current shareholders.
While there is no guarantee that we will be successful, we are applying to non-dilutive funding opportunities such as Small Business
Research and Development programs. In addition, subject to limitations on the amount of capital that can be raised, the Company expects
to utilize its shelf registration on statement on Form S-3 to raise capital through at-the-market offerings or otherwise.
Please
refer to Item 1A. “Risk Factors” for further information on the risks related to the Company.
(in thousands, audited)
As of
March 31,
2025
($)
As of
March 31,
2024
($)
Change
($)
Percent
Change
Cash, cash equivalents
405
1,198
(793
)
(66
)%
Working capital
639
1,365
(726
)
(53
)%
Cash
and cash equivalents
Cash
and cash equivalents decreased by approximately $793 thousand to $405 thousand in Fiscal 2025 from $1.2 million in Fiscal 2024, a decrease
of approximately 66%. This is discussed in the summary of cash flows, as follows:
(in thousands, audited)
Fiscal
2025
($)
2024
($)
Change
($)
Percent
Change
Cash used in operating activities
(4,794 )
(5,199 )
405
(8 )%
Cash used in investing activities
(442 )
(317 )
(126 )
40 %
Cash provided by financing activities
4,451
3,524
927
26 %
Effects of exchange rate changes on cash and cash equivalents
(7 )
(6 )
(1 )
14 %
Net decrease in cash and cash equivalents
(792 )
(1,998 )
1,206
(60 )%
Cash and cash equivalents at the beginning of the period
1,198
3,196
(1,998 )
(63 )%
Cash and cash equivalents at the end of the period
405
1,198
(792 )
(66 )%
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Operating
Activities
Net
cash used in operating activities for Fiscal 2025 was approximately $4.8 million. It consists of a net loss of approximately $7.1 million,
a positive impact on cash due to non-cash expenses of approximately $2.3 million, and changes in operating assets and liabilities of
approximately $70 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $618 thousand, stock-based
expenses of approximately $1.6 million, impairment loss of approximately $152 thousand and an approximately $12 thousand decrease in
other non-cash items. In addition, changes in operating assets and liabilities had a positive impact of approximately $70 thousand on
cash, of which approximately $180 thousand is due to an adjustment in inventory, approximately $107 thousand increase in accounts payable,
approximately $187 decrease in deposit and advances, approximately $195 thousand decrease in accrued and other current liabilities, approximately
$100 thousand increase in operating lease assets, and approximately $75 thousand increase in other net current assets.
Net
cash used in operating activities for Fiscal 2024 was approximately $5.2 million. It consists of a net loss of approximately $13 million,
a positive impact on cash due to non-cash expenses of approximately $5.9 million, and changes in operating assets and liabilities of
approximately $1.9 million. Non-cash expenses consist of an amortization and depreciation charge of approximately $637 thousand, stock-based
expenses of approximately $1.7 million, impairment loss of approximately $3.4 million, and an approximately $49 thousand decrease in
other non-cash items. In addition, changes in operating assets and liabilities had a positive impact of approximately $1.9 million on
cash, of which approximately $1 million is due to an adjustment in inventory, approximately $243 thousand increase in accounts payable,
approximately $315 thousand increase in claims and advances and approximately $328 thousand increase in other net current assets.
Investing
Activities
Net
cash used in investing activities for Fiscal 2025, was approximately $442 thousand, which comprises approximately $370 thousand for the
acquisition and development of intangible assets, and approximately $72 thousand from the net purchase of property, plant, and equipment.
Net
cash used in investing activities for Fiscal 2024, was approximately $317 thousand, which comprises approximately $377 thousand for the
acquisition and development of intangible assets, approximately $94 thousand from the net purchase of property, plant, and equipment,
and approximately $154 thousand from a short-term investment.
Financing
Activities
Net
cash provided by financing activities was approximately $4.4 million for Fiscal 2025, which comprises net proceeds from the issuance
of equity stock of approximately $4.4 million and re-payment of a long-term loan of approximately $3 thousand.
Net
cash provided by financing activities was approximately $3.5 million for Fiscal 2024, which comprises net proceeds from the issuance
of equity stock of approximately $3.5 million and re-payment of a long-term loan of approximately $3 thousand.
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Critical
Accounting Policies and Estimates
The
preparation of financial statements and related disclosures in conformity with U.S. GAAP and the Company’s discussion and analysis
of its financial condition and operating results require the Company’s management to make judgments, assumptions, and estimates
that affect the amounts reported in its consolidated financial statements and accompanying notes. We base our estimates on historical
experience, as appropriate, and on various other assumptions that we believe to be reasonable under the circumstances. Actual results
may differ from these estimates, and such differences may be material. For further information on significant accounting policies, see
discussion in Note 2 to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
Management
believes that the following accounting policies are the most critical to understanding and evaluating our consolidated financial condition
and results of operations.
Revenue
Recognition
The
Company recognizes revenue under ASC 606, Revenue from Contracts with Customers (ASC 606). The core principle of this standard
is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects
the consideration to which the Company expects to be entitled in exchange for those goods or services.
ASC
606 prescribes a 5-step process to achieve its core principle. The Company recognizes revenue from trading, rental, or product sales
as follows:
I.
Identify the contract with the customer.
II.
Identify the contractual performance obligations.
III.
Determine the amount of consideration/price for the transaction.
IV.
Allocate the determined amount of consideration/price to the performance obligations.
V.
Recognize revenue when or as the performing party satisfies performance obligations.
The
consideration/price for the transaction (performance obligation(s)) is determined as per the agreement or invoice (contract) for the
services and products Life Sciences segment.
In
the Life Sciences segment, the revenue from the wellness and lifestyle business is recognized once goods have been sold to the customer
and the performance obligation has been completed. In retail sales, we offer consumer products through our online stores. Revenue is
recognized when control of the goods is transferred to the customer. This generally occurs upon our delivery to a third-party carrier
or to the customer directly. Revenue from white label services is recognized when the performance obligation has been completed and output
material has been transferred to the customer.
Net
sales disaggregated by significant products and services for Fiscal 2025 and 2024 are as follows:
(in
thousands)
Year ended March 31,
2025
($)
2024
($)
Wellness and lifestyle (1)
113
228
White labeling services (2)
1,158
953
Other (3)
-
164
Total
1,271
1,345
(1) Revenue
from wellness and lifestyle consists of the sale of products such as gummies, hand sanitizers, bath bombs, lotions, beverages, hemp crude
extract, hemp isolate, and hemp distillate.
(2) Revenue
from white label services consists of rebranding our formulations or the customer’s products as per the customer’s requirement.
(3) Other
consists of income from the rental of heavy construction equipment and the execution of contracts directly or through subcontractors.
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Property,
plant, and equipment
Property, plant, and equipment
are recorded at cost, net of accumulated depreciation. Depreciation is recorded using the straight-line method over the estimated useful
lives of the assets. Please refer to Note 2, “Significant accounting policies” and Note 6, “Property, plant, and equipment”
of Item 8 in this document, for more information. Property, plant, and equipment are reviewed for impairment when events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable. If property, plant, and equipment are considered to be
impaired, an impairment loss is recognized.
During
Fiscal 2025, there was no impairment loss on PPE. During Fiscal 2024, as the Company focused on liquidating all non-operating assets
to reduce costs and generate cash, the Company impaired the land situated in Nagpur, India, by approximately $3.3 million to $720 thousand
from $4.1 million. The Company believes it can sell the above-said non-operating land as it is without any improvement. Selling this
land will give immediate cash, which the company can use in its operating segments.
Software
Development Costs
The
Company is developing two proprietary software platforms intended to be commercialized:
1. A
clinical data management platform designed for the collection, analysis, and real-time
monitoring of clinical trial data; and;
2. A
MINT- AD - AI-driven diagnostic and treatment personalization platform aimed at assisting
in the early detection of Alzheimer’s disease and providing data-informed therapeutic
suggestions.
In
accordance with ASC 985-20 , Software to Be Sold, Leased, or Marketed , the Company capitalizes development costs incurred
after technological feasibility has been established and before the software is available for general release. Costs incurred during
the research, planning, or preliminary design phase are expensed as incurred.
Capitalized
costs include direct labor, third-party development services, cloud computing infrastructure directly related to model development and
deployment, and associated overhead. These costs are amortized on a straight-line basis over their estimated useful lives, typically
five to ten years , beginning when the software is ready for its intended commercial use.
During
Fiscal 2024, the Company began working on overlaying machine learning technologies and Artificial Intelligence (AI) into the internal
clinical trial software framework for trial management with the expectation that this can lead to improved decision-making, contextual
data entry, computational models, trial design (Phase 3), and data analysis, the company believes it is probable that the project will
be completed and the software will be used to perform the function intended. As of Fiscal year ended 2025, the Company capitalized approximately
$863 thousand in software development costs. Please refer to Note 5, “Intangible Assets,” for more information.
Foreign
currency translation
IGC
operates in India, U.S., and Colombia, and a substantial portion of the Company’s financials are denominated in the Indian Rupee
(INR), or the Colombian Peso (COP). As a result, changes in the relative values of the U.S. Dollar (USD), the INR, or the COP affect
financial statements.
50
Table of Contents
The
accompanying financial statements are reported in USD. The INR, 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.
Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported
as other comprehensive income/(loss), a separate component of shareholders’ equity. Transactions in currencies other than the functional
currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions
occurred. Transaction gains and losses are recognized in the consolidated statements of operations. The exchange rates used for translation
purposes are as follows:
Period
End Average Rate
Period
End Rate
Period
(P&L
rate)
(Balance
sheet rate)
Year ended March
31, 2025
INR
84.54
Per
USD
INR
85.45
Per
USD
COP
4,140.74
Per
USD
COP
4,200
Per
USD
Year ended March 31, 2024
INR
82.79
Per
USD
INR
83.38
Per
USD
COP
4,114
Per
USD
COP
3,862
Per
USD
Cybersecurity
We
have a cybersecurity policy in place and have implemented tighter cybersecurity measures to safeguard against hackers. Complying with
these security measures and compliances is expected to incur further expenses. In Fiscal 2025 and Fiscal 2024, there were no known or
detected material breaches in cybersecurity.
Off-balance
sheet arrangements
We
do not have any outstanding derivative financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign
currency forward contracts. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity, or market risk support to such entity. We do not have any variable interest in an unconsolidated
entity that provides financing, liquidity, market risk or credit support to us or that engages in leasing, hedging or research and development
services with us.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item
7A does not apply to us because we are a smaller reporting company.