The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
The accompanying notes should be read in connection with these Condensed Consolidated Financial Statements.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED JUNE 30, 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. Our public filings with the Securities and Exchange Commission, the “SEC,” are available on www.sec.gov. The information contained on our various websites, including www.igcinc.us, is not incorporated by reference in this report, and you should not consider such information to be a part of this report. We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider such information to be a part of this report.
NOTE 1 – BUSINESS DESCRIPTION
Overview
IGC has two business segments: Infrastructure and Life Sciences.
Infrastructure Segment
The Infrastructure segment involves the execution of construction contracts and the rental of heavy construction equipment. Since our inception, the Company has operated its Infrastructure segment from India.
Life Sciences Segment
The Life Sciences segment involves our over the counter products (“OTC”) and our biopharmaceutical products.
Over the Counter Products: 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.
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Holief™ is an all-natural, non-GMO, vegan, line of OTC products aimed at treating menstrual cramps (dysmenorrhea) and premenstrual symptoms (“PMS”).
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Sunday Seltzer™ is an all-natural, organic, carbonated energy drink with natural caffeine from green tea extract, CBD, vitamins B, vitamin C, no added sugars, and no preservatives. The energy drink is available in two flavors, pomegranate-lemon, and peach-ginger. In addition, Sunday Seltzer™ is also available in four flavors with CBD, vitamins B, vitamin C, and no caffeine.
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Both Holief™ and Sunday Seltzer™ are compliant with relevant federal, state, and local laws, and regulations.
Biopharmaceutical:
Since 2014, this part of our business has focused primarily on the potential uses of phytocannabinoids, including Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”), in combination with other compounds to treat multiple diseases, including Alzheimer’s. As a company engaged in the clinical-stage biopharmaceutical industry, we focus our research and development efforts, subject to results of future clinical trials, on seeking pharmaceutical solutions that may a) alleviate neuropsychiatric symptoms such as agitation, anxiety, and depression associated with dementia in Alzheimer’s disease; and b) halt the onset, progression, or cure Alzheimer’s disease. We currently have one investigational new drug candidate, “IGC-AD1,” in a Phase 2 clinical trial for agitation in dementia from Alzheimer’s. IGC-AD1 is a cannabis-based compound, which is made up of ultra-low doses of THC along with another compound as active ingredients. The second molecule, TGR-63, is an enzyme inhibitor that has been shown, in pre-clinical trials, to reduce neurotoxicity in Alzheimer’s cell lines. Neurotoxicity causes cell dysfunction and death in Alzheimer’s disease. If shown to be efficacious in halting this process, this inhibitor has the potential to treat Alzheimer’s disease by ameliorating Aβ plaques.
The Company completed all dose escalation studies, and as announced by the Company on December 2, 2021, the results of the clinical trial have been submitted in the Clinical/Statistical Report (“CSR”) filed with U.S. Food and Drug Administration (the “FDA”). The Company is motivated by the potential that, with future successful results from appropriate further trials, IGC-AD1 could contribute to relief for some of the 55 million people around the world expected to be impacted by Alzheimer’s disease by 2030 (WHO, 2021).
| June 30, 2022, Form 10-Q
Phase 2 Clinical Trial Update
The Company has initiated a protocol titled “A Phase 2, Multi-Center, Double-Blind, Randomized, Placebo-controlled, trial of the safety and efficacy of IGC-AD1 on agitation in participants with dementia due to Alzheimer’s disease.” The protocol is powered at 146 Alzheimer’s patients with half receiving placebo and is a superiority, parallel group study. While subject to changes, we expect to conduct the trial at three sites, one in Canada and two in the U.S. The primary end point is agitation in dementia due to Alzheimer’s disease as rated by the Cohen-Mansfield Agitation Inventory (CMAI) over a six-week period. The Phase 2 trial will also look at eleven exploratory objectives, including, changes in anxiety, changes in cognitive processes such as attention, orientation, language, and visual spatial skills as well as memory, changes in depression, delusions, hallucinations, euphoria/elation, apathy, disinhibition, irritability, aberrant motor behavior, sleep disorder, appetite, quality of life, and caregiver burden. In addition, we will assess the impact of an important gene (CYP2C9) that encodes an enzyme that is involved in metabolizing the active ingredients of IGC-AD1 and many other drugs. Each participant will receive two doses of IGC-AD1 (b.i.d.) or two doses of placebo per day for six-weeks.
To the best of our knowledge, this is the first human clinical trial using ultra low doses of THC, in combination with another molecule, to treat symptoms of dementia in Alzheimer’s patients. THC is a naturally occurring cannabinoid produced by the cannabis plant. It is known for being a psychoactive substance that can impact mental processes in a positive or negative way depending on the dosage. THC is biphasic, meaning that low and high doses of the substance may affect mental and physiological processes in substantially different ways. For example, in some patients, low doses may relieve a symptom, whereas high doses may amplify a symptom. Ultimately, the goal of IGC’s research is to discover and analyze whether, and at what level of dosing, IGC-AD1 provides relief of a given symptom. IGC’s trial is based on micro dosing on patients suffering from Alzheimer’s disease. With further trials, subject to FDA approvals, the Company intends to pursue the efficacy of IGC-AD1 for indications of Agitation in patients with dementia from Alzheimer’s.
Other Developments
Our pipeline of investigational and development cannabinoid formulations also includes pain creams and tinctures for pain relief. We believe that the biopharmaceutical component of our Life Sciences strategy will at least take several more years to mature and involves considerable risk; however, we also believe it may involve greater defensible growth potential and first-to-market advantage.
Although there can be no assurance, we believe this strategy has the potential to improve existing products and lead to the creation of new products, which, based on scientific study and research, may offer positive results for the management of certain conditions, symptoms, and side effects.
While the bulk of our medium and longer-term focus is on clinical trials and getting IGC-AD1 to be an FDA approved drug, our shorter-term strategy, is to use our resources to provide white label services and market Holief™ and Sunday Seltzer™. We believe this may provide us with several profit opportunities, although there can be no assurance of such profit opportunities.
The Company has filed fifteen (15) patent applications to address various diseases such as Alzheimer’s, Central Nervous System (“CNS”) disorders, pain, stammering, seizures in cats and dogs, eating disorders, stress-relief, and calm-restoring beverage, and fatigue. As of June 30, 2022, we have four patents.
In addition, we license two patent filings, from the:
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University of South Florida titled “Ultra-Low dose THC as a potential therapeutic and prophylactic agent for Alzheimer’s Disease.” The U.S. Patent and Trademark Office (“USPTO”) issued a patent (#11,065,225) for this filing on July 20, 2021. The granted patent relates to IGC’s proprietary formulation, IGC-AD1, intended to assist in the treatment of individuals living with Alzheimer’s disease;
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Jawaharlal Nehru Centre for Advanced Scientific Research (“JNCASR”) for exclusive global rights corresponding to the molecules, technology, patent, and patent filings that were the subject of JNCASR’s research into naphthalene monoimide (NMI) compounds and the role of NMI compounds have on neurotoxicity associated with Alzheimer’s Disease.” The U.S. Patent and Trademark Office (“USPTO”) issued a patent (#9230708 B2) for this filing on January 5, 2016.
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| June 30, 2022, Form 10-Q
The Company is developing three brands, including Holief™, among others. Holief™ is a non-GMO, vegan, natural, women’s line of OTC products aimed at addressing dysmenorrhea and PMS in women. Holief™, in development, seeks to connect, via a cloud-based platform, women with health care professionals who can help address dysmenorrhea, or period cramps, and PMS. Approximately 31.3 million (Statista, 2021) women in America suffer from dysmenorrhea and PMS.
Business Organization
As of June 30, 2022, the Company had the following operating subsidiaries: Techni Bharathi Private Limited (TBL), IGCare LLC, Holi Hemp, LLC, IGC Pharma LLC, SAN Holdings LLC, Sunday Seltzer, LLC, Hamsa Biopharma India Pvt. Ltd., and Colombia-based beneficially-owned subsidiary Hamsa Biopharma Colombia SAS (formerly Hamsa Biochem SAS) (Hamsa). The Company’s fiscal year is the 52- or 53-week period that ends on March 31. The Company is a Maryland corporation established in 2005. The Company’s public filings with the SEC are available on www.sec.gov.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying condensed consolidated Balance Sheet as of June 30, 2022, and March 31, 2022, condensed consolidated statements of operations for the three months ended June 30, 2022, and 2021, and condensed consolidated statements of changes in stockholders’ deficit for the three months ended June 30, 2022, and 2021, and condensed consolidated statements of cash flows for the three months ended June 30, 2022, and 2021, are unaudited. The 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. (“U.S. GAAP”) as determined by the Financial Accounting Standards Board (the “FASB”) within its Accounting Standards Codification (“ASC”) and under the rules and regulations of the SEC.
Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, and disclosures necessary for a fair presentation of these interim statements have been included. The results reported in these interim statements are not necessarily indicative of the results that may be reported for the entire year. These interim statements should be read in conjunction with the Company’s audited consolidated financial statements for the fiscal year ended March 31, 2022 (“Fiscal 2022”) contained in the Company’s Form 10-K for Fiscal 2022, filed with the SEC on June 23, 2022, specifically in Note 2 to the consolidated financial statements.
Principles of consolidation
The interim statements include the consolidated accounts of the Company and its subsidiaries. Intercompany accounts and transactions have been eliminated. In the opinion of Management, the interim statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation.
Use of estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Management believes that the estimates and assumptions used in the preparation of the consolidated financial statements are prudent and reasonable. Significant estimates and assumptions are generally used for, but not limited to, allowance for uncollectible accounts receivable; sales returns; normal loss during production; future obligations under employee benefit plans; the useful lives of property, plant equipment; intangible assets; valuations; impairment of goodwill and investments; recoverability of advances; the valuation of options granted, and warrants issued; and income tax and deferred tax valuation allowances, if any. Actual results could differ from those estimates. Appropriate changes in estimates are made as Management becomes aware of changes in circumstances surrounding the estimates. Critical accounting estimates could change from period to period and could have a material impact on IGC’s results, operations, financial position, and cash flows. Changes in estimates are reflected in the financial statements in the period in which changes are made and, if material, their effects are disclosed in the notes to the condensed consolidated financial statements.
| June 30, 2022, Form 10-Q
Presentation and functional currencies
IGC operates in India, U.S., Colombia, and Hong Kong, and a portion of the Company’s financials are denominated in the Indian Rupee (“INR”), the Hong Kong Dollar (“HKD”), or the Colombian Peso (“COP”). As a result, changes in the relative values of the U.S. Dollar (“USD”), the INR, the HKD, or the COP affect our financial statements.
The accompanying financial statements are reported in USD. The INR, HKD, and COP are the functional currencies for certain subsidiaries of the Company. The translation of the functional currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues and expenses using average exchange rates prevailing during the reporting periods. Adjustments resulting from the translation of functional currency financial statements to reporting currency are accumulated and reported as other comprehensive (loss), a separate component of shareholders’ equity. Transactions in currencies other than the functional currency during the year are converted into the functional currency at the applicable rates of exchange prevailing when the transactions occurred. Transaction gains and losses are recognized in the consolidated statements of operations.
Impairment of long – lived assets
The Company reviews its long-lived assets, with finite lives, for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable. Such circumstances include, though are not limited to, significant or sustained declines in revenues or earnings, future anticipated cash flows, business plans, and material adverse changes in the economic climate, such as changes in the operating environment, competitive information, and impact of changes in government policies. For assets that the Company intends to hold for use if the total of the expected future undiscounted cash flows produced by the assets or subsidiary company is less than the carrying amount of the assets, a loss is recognized for the difference between the fair value and carrying value of the assets. For assets, the Company intends to dispose of by sale, a loss is recognized for the amount by which the estimated fair value less cost to sell is less than the carrying value of the assets. Fair value is determined based on quoted market prices, if available, or other valuation techniques including discounted future net cash flows. Unlike goodwill, long-lived assets are assessed for impairment only where there are any specific indicators for impairment.
No impairment has been recorded for the three months ended June 30, 2022, and 2021.
Short-term and long-term investments
Our policy for short-term and long-term investments is to establish a high-quality portfolio that preserves principal, meets liquidity needs, avoids inappropriate concentrations, and delivers an appropriate yield in relation to our investment guidelines and market conditions. Short-term and long-term investments consist of corporate, various government agency and municipal debt securities, as well as certificates of deposit that have maturity dates that are greater than 90 days. Certificates of deposit and commercial paper are carried at cost which approximates fair value. Available-for-sale securities: Investments in debt securities that are classified as available for sale shall be measured subsequently at fair value in the statement of financial position.
Investments are initially measured at cost, which is the fair value of the consideration given for them, including transaction costs. Where the Company’s ownership interest is in excess of 20% and the Company has a significant influence, the Company has accounted for the investment based on the equity method in accordance with ASC Topic 323, “Investments – Equity method and Joint Ventures.” Under the equity method, the Company’s share of the post-acquisition profits or losses of the equity investee is recognized in the consolidated statements of operations and its share of post-acquisition movements in accumulated other comprehensive income / (loss) is recognized in other comprehensive income / (loss). Where the Company does not have significant influence, the Company has accounted for the investment in accordance with ASC Topic 321, “Investments-Equity Securities.”
As of June 30, 2022, the Company does not have any investment in marketable securities.
| June 30, 2022, Form 10-Q
Stock–based compensation
The Company accounts for stock-based compensation to employees and non-employees in conformity with the provisions of ASC Topic 718, “Stock-Based Compensation.” The Company expenses stock-based compensation to employees over the requisite vesting period based on the estimated grant-date fair value of the awards. The Company accounts for forfeitures as they occur. Stock-based awards are recognized on a straight-line basis over the requisite vesting period. For stock-based employee compensation cost recognized at any date will be at least equal to the amount attributable to the share-based compensation that is vested at that date. For performance-based awards, stock-based compensation expense is recognized over the expected performance achievement period of individual performance milestones when the achievement of each individual performance milestone becomes probable by best of management estimate. For performance-based awards with a vesting schedule based entirely on the attainment of performance conditions, stock-based compensation expense associated with each tranche is recognized over the expected achievement period for the operational milestone, beginning at the point in time when the relevant operational milestone is considered probable to be achieved.
For market-based awards, stock-based compensation expense is recognized over the expected achievement period. The fair value of such awards is estimated on the grant date using binomial lattice model.
The Company estimates the fair value of stock option grants using the Black-Scholes option-pricing model. The assumptions used in calculating the fair value of stock-based awards represent Management’s best estimates. Generally, the closing share price of the Company’s common stock on the date of grant is considered the fair value of the share. The volatility factor is determined based on the Company’s historical stock prices. The expected term represents the period that our stock-based awards are expected to be outstanding. The Company has never declared or paid any cash dividends. For further information refer to Note 14, “Stock-Based Compensation” of Notes to Consolidated Financial Statements.
Accounts receivable
We make estimates of the collectability of our accounts receivable by analyzing historical payment patterns, customer concentrations, customer creditworthiness, and current economic trends. If the financial condition of a customer deteriorates, additional allowances may be required. We had $147 thousand of accounts receivable, net of provision for the doubtful debt of $92 thousand as of June 30, 2022, as compared to $124 thousand of accounts receivable, net of provision for the doubtful debt of $93 thousand as of March 31, 2022.
Inventory
Inventory is valued at the lower of cost or net realizable value, which is defined as estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation.
Inventory consists of raw materials, finished goods related to wellness products, hand sanitizers, finished hemp-based products, beverages, among others as well as work-in-progress such as extracted hemp crude oil, hemp-based isolate, growing crops, harvested crops, and herbal oils, among others. Work-in-progress also includes product manufacturing in process, costs of growing hemp, in accordance with applicable laws and regulations including but not limited to labor, utilities, fertilizers, and irrigation. Inventory is primarily accounted for using the weighted average cost method. Primary costs include raw materials, packaging, direct labor, overhead, shipping, and the depreciation of manufacturing equipment. Manufacturing overhead and related expenses include salaries, wages, employee benefits, utilities, maintenance, and property taxes.
Abnormal amounts of idle facility expense, freight, handling costs, scrap, discontinued products and wasted material (spoilage) are expensed in the period they are incurred.
Fair value of financial instruments
ASC 820, “Fair Value Measurement” defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. It also establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1: Observable inputs such as quoted prices in active markets;
Level 2: Inputs, other than the quoted prices in active markets, that are observable either directly or indirectly; and
Level 3: Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.
| June 30, 2022, Form 10-Q
The carrying amounts of the Company’s financial instrument include cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities, approximate their fair values due to the nature of the items. Please refer to Note 15 – “Fair Value of Financial Instruments”, for further information.
Earnings/(Loss) per share
The computation of basic loss per share for the three months ended June 30, 2022, excludes potentially dilutive securities of approximately 7.1 million shares which includes share options, unvested shares such as restricted shares and restricted share units, granted to employees, non-employees, and advisors, and shares from the conversion of outstanding units, if any because their inclusion would be anti-dilutive.
The weighted average number of shares outstanding for the three months ended June 30, 2022, and 2021, used for the computation of basic earnings per share (“EPS”) is 51,616,598 and 47,910,866, respectively. Due to the loss incurred by the Company during the three months ended June 30, 2022, and 2021, all the potential equity shares are anti-dilutive, and accordingly, the fully diluted EPS is equal to the basic EPS.
Cybersecurity
We have a cybersecurity policy in place and have taken cybersecurity measures that, while there can be no assurance, we expect are likely to safeguard the Company against breaches. In the three months ended June 30, 2022, there were no impactful breaches in cybersecurity.
Intangible assets
The Company’s intangible assets are accounted for in accordance with ASC Topic 350, Intangibles – Goodwill and Other. Intangible assets having indefinite lives are not amortized, but instead are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value. We perform an impairment analysis on March 1 annually on the indefinite-lived intangible assets following the steps laid out in ASC 350-30-35-18. Our annual impairment analysis includes a qualitative assessment to determine if it is necessary to perform the quantitative impairment test. In performing a qualitative assessment, we review events and circumstances that could affect the significant inputs used to determine if the fair value is less than the carrying value of the intangible assets. If quantitative analysis is necessary, we would analyze various aspects including revenues from the business, associated with the intangible assets. 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. In accordance with ASC 360-10-35-21, definite lived intangibles are reviewed annually or more frequently if events or changes in circumstances indicate that the assets might be impaired, to assess whether their fair value exceeds their carrying value.
The Company intends to capitalize trademarks and related expenses exceeding $2,500 per trademark. Management may also capitalize trademarks and related expenses up to $2,500 per trademark based on its potential and benefit in coming years.
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.
| June 30, 2022, Form 10-Q
The consideration/price for the transaction (performance obligation(s)) is determined as per the agreement or invoice (contract) for the services and products in the Infrastructure and Life Sciences segment.
Revenue in the Infrastructure Business is recognized for the renting business when the equipment is rented, and terms of the agreement have been fulfilled during the period. The revenue from the purchase and resale of physical infrastructure commodities is recognized once the bill of lading along with the invoice has been transferred to the customer. Revenue from the execution of infrastructure contracts is recognized on the basis of the output method as and when part of the performance obligation has been completed and approval from the contracting agency has been obtained after a survey of the performance completion as of that date. 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 tolling services is recognized when the performance obligation, such as processing of the material, has been completed and output material has been transferred to the customer. We license our products to processors. The royalty income from licensing is recognized once goods have been sold by the processor to its customers.
Net sales disaggregated by significant products and services for the three months ended June 30, 2022, and 2021 are as follows:
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(in thousands)
Three months ended June 30,
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2022
($) |
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2021
($) |
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Infrastructure segment
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Rental income (1)
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10 |
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- |
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Construction contracts (2)
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- |
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15 |
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Life Sciences segment
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Wellness and lifestyle (3)
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80 |
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62 |
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White labeling services (4)
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122 |
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- |
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Total
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212 |
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77 |
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(1) Rental income consists of income from rental of heavy construction equipment.
(2) Construction contracts consist of the execution of contracts directly or through subcontractors.
(3) Relates to revenue from the Life Sciences segment including the sale of wellness and lifestyle products such as hand sanitizers, bath bombs, lotions, gummies, beverages, hemp crude extract, hemp isolate, and hemp distillate.
(4) Relates to revenue from the Life Sciences segment, including income white label services, which refers to a fully supported product or service that is made by us but sold by another company.
Leases
Lessor Accounting
Under the current ASU guidance, contract consideration will be allocated to its lease components and non-lease components (such as maintenance). For the Company as a lessor, any non-lease components will be accounted for under ASC Topic 606, “Revenue from Contracts with Customers”, unless the Company elects a lessor practical expedient to not separate the non-lease components from the associated lease component. The amendments in ASU 2018-11 also provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated lease component and, instead, to account for those components as a single component if the non-lease components otherwise would be accounted for under the new revenue guidance (“Topic 606”). To elect the practical expedient, the timing and pattern of transfer of the lease and non-lease components must be the same and the lease component must meet the criteria to be classified as an operating lease if accounted for separately. If these criteria are met, the single component will be accounted for under either Topic 842 or Topic 606 depending on which component(s) are predominant. The lessor practical expedient to not separate non-lease components from the associated component must be elected for all existing and new leases.
| June 30, 2022, Form 10-Q
As lessor, the Company expects that post-adoption substantially all existing leases will have no change in the timing of revenue recognition until their expiration or termination. The Company expects to elect the lessor practical expedient to not separate non-lease components such as maintenance from the associated lease for all existing and new leases and to account for the combined component as a single lease component. The timing of revenue recognition is expected to be the same for most the Company’s new leases as compared to similar existing leases; however, certain categories of new leases could have different revenue recognition patterns as compared to similar existing leases.
For leases that are accounted for as operating leases, income is recognized on a straight-line basis over the term of the lease contract. Generally, when a lease is more than 180 days delinquent (where more than three monthly payments are owed), the lease is classified as being on nonaccrual and the Company stops recognizing leasing income on that date. Payments received on leases in nonaccrual status generally reduce the lease receivable. Leases on nonaccrual status remain classified as such until there is sustained payment performance that, in the Company’s judgment, would indicate that all contractual amounts will be collected in full.
Lessee Accounting
The Company adopted ASU 2016-02 effective April 1, 2019, using the modified retrospective approach. The standard establishes a right-of-use model (“ROU”) that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases will be classified as a finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. In connection with the adoption, the Company will elect to utilize the modified retrospective presentation whereby the Company will continue to present prior period financial statements and disclosures under ASC Topic 840. In addition, the Company will elect the transition package of three practical expedients permitted within the standard, which eliminates the requirements to reassess prior conclusions about lease identification, lease classification, and initial direct costs. Further, the Company will adopt a short-term lease exception policy, permitting us to not apply the recognition requirements of this standard to short-term leases (i.e., leases with terms of 12 months or less), and an accounting policy to account for lease and non-lease components as a single component for certain classes of assets.
Under ASU 2016-02 (Topic 842), lessees are required to recognize the following for all leases (with the exception of short-term leases) on the commencement date: (i) lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis; and (ii) right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term.
At the commencement date, the Company recognizes the lease liability at the present value of the lease payments not yet paid, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate for the same term as the underlying lease. The right-of-use asset is recognized initially at cost, which primarily comprises the initial amount of the lease liability, plus any initial direct costs incurred, consisting mainly of brokerage commissions, less any lease incentives received. All right-of-use assets are reviewed for impairment. There was no impairment for right-of-use lease assets as of June 30, 2022.
The Company categorizes leases at their inception as either operating or finance leases. On certain lease agreements, the Company may receive rent holidays and other incentives. The Company recognizes lease costs on a straight-line basis without regard to deferred payment terms, such as rent holidays, that defer the commencement date of required payments. Please refer to “Note 9 - Leases”, for further information.
Recently issued accounting pronouncements
Changes to U.S. GAAP are established by the FASB in the form of accounting standards updates (“ASUs”) to the FASB’s Accounting Standards Codification. The Company considers the applicability and impact of all ASUs. Accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the condensed financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its condensed financial statements.
| June 30, 2022, Form 10-Q
NOTE 3 – INVENTORY
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(in thousands)
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As of
June 30, 2022
($)
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As of
March 31, 2022
($)
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Raw materials
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2,242 |
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2,247 |
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Work-in-Progress
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628 |
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584 |
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Finished goods
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752 |
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717 |
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Total
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3,622 |
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3,548 |
|
Inventory in the form of work-in-progress as of June 30, 2022, comprises, but it is not limited to, various hemp-based extracts such as hemp crude oil, hemp distillate, and hemp isolate. Finished goods comprises, but it’s not limited to, hand sanitizers, gummies, lotions, and beverages, among others.
During the three months ended June 30, 2022, the Company wrote off approximately $73 thousand of inventory due to abnormal amounts of idle facility expense, freight, handling costs, scrap, and wasted material (spoilage). This charge was recorded in Selling, General, and Administrative Expenses.
NOTE 4 – DEPOSITS AND ADVANCES
|
|
(in thousands)
|
|
|
|
As of
June 30, 2022
($)
|
|
|
As of
March 31, 2022
($)
|
|
Advances to suppliers and consultants
|
|
|
159 |
|
|
|
170 |
|
Other receivables and deposits
|
|
|
495 |
|
|
|
472 |
|
Prepaid expense and other current assets
|
|
|
251 |
|
|
|
336 |
|
Total
|
|
|
905 |
|
|
|
978 |
|
The Advances to suppliers and consultants primarily relate to advances to suppliers in our Life Sciences and Infrastructure segments. Prepaid expense and other current assets include approximately $125 thousand of statutory advances as of June 30, 2022, as compared to $170 thousand as of March 31, 2022.
NOTE 5 – INTANGIBLE ASSETS
|
|
(in thousands)
|
|
|
|
As of
June 30, 2022
($)
|
|
|
As of
March 31,
2022
($)
|
|
Amortized intangible assets |
|
|
|
|
|
|
|
|
Patents
|
|
|
522 |
|
|
|
290 |
|
Other intangibles
|
|
|
32 |
|
|
|
32 |
|
Accumulated amortization
|
|
|
(61 |
) |
|
|
(51 |
) |
Total amortized intangible assets
|
|
|
493 |
|
|
|
271 |
|
|
|
|
|
|
|
|
|
|
Other intangible assets |
|
|
|
|
|
|
|
|
Patents
|
|
|
444 |
|
|
|
646 |
|
Other intangibles
|
|
|
- |
|
|
|
- |
|
Total unamortized intangible assets
|
|
|
444 |
|
|
|
646 |
|
Total intangible assets
|
|
|
937 |
|
|
|
917 |
|
| June 30, 2022, Form 10-Q
The value of intangible assets includes the cost of acquiring patent rights, supporting data, and the expense associated with filing 15 patents. It also includes acquisition costs related to domains and licenses.
The amortization of patent and patent rights with finite life is up to 20 years, commencing from the date of grant or acquisition. The amortization expense in the three months ended June 30, 2022, and 2021, amounted to approximately $10 thousand and $5 thousand, respectively.
The Company regularly reviews its intangible assets to determine if any intangible asset is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period and concluded that, as of June 30, 2022, there was no impairment.
Estimated amortization expense
|
|
(in thousands)
($)
|
|
For the year ended 2024
|
|
|
11 |
|
For the year ended 2025
|
|
|
12 |
|
For the year ended 2026
|
|
|
14 |
|
For the year ended 2027
|
|
|
15 |
|
For the year ended 2028
|
|
|
16 |
|
NOTE 6 – PROPERTY, PLANT, AND EQUIPMENT
|
|
(in thousands, except useful life)
|
|
|
|
Useful Life (years)
|
|
|
As of
June 30, 2022
($)
|
|
|
As of
March 31, 2022
($)
|
|
Land
|
|
N/A |
|
|
|
4,266 |
|
|
|
4,438 |
|
Buildings and facilities
|
|
25 |
|
|
|
2,966 |
|
|
|
2,810 |
|
Plant and machinery
|
|
5-20 |
|
|
|
4,351 |
|
|
|
4,594 |
|
Computer equipment
|
|
3 |
|
|
|
241 |
|
|
|
241 |
|
Office equipment
|
|
3-5 |
|
|
|
184 |
|
|
|
145 |
|
Furniture and fixtures
|
|
5 |
|
|
|
142 |
|
|
|
141 |
|
Vehicles
|
|
5 |
|
|
|
161 |
|
|
|
163 |
|
Construction in progress
|
|
N/A |
|
|
|
- |
|
|
|
108 |
|
Total gross value
|
|
|
|
|
|
12,311 |
|
|
|
12,639 |
|
Less: Accumulated depreciation
|
|
|
|
|
|
(3,150 |
) |
|
|
(3,220 |
) |
Total property, plant, and equipment, net
|
|
|
|
|
|
9,161 |
|
|
|
9,419 |
|
The depreciation expense in the three months ended June 30, 2022, and 2021, amounted to approximately $152 thousand for each of the periods. The net decrease in total Property, Plant and Equipment is primarily due to depreciation and foreign exchange translations of a decrease in value of foreign currencies. As of June 30, 2022, the construction in progress related to the Maryland office extension is completed and moved to Building and facilities. For more information, please refer to Note 16 – “Segment Information” for the non-current assets other than financial instruments held in the country of domicile and foreign countries.
NOTE 7 – LEFT BLANK INTENTIONALLY
| June 30, 2022, Form 10-Q
NOTE 8 – CLAIMS AND ADVANCES
|
|
(in thousands)
|
|
|
|
As of
June 30, 2022
($)
|
|
|
As of
March 31, 2022
($)
|
|
Claims receivable (1)
|
|
|
354 |
|
|
|
368 |
|
Non-current advances (2)
|
|
|
568 |
|
|
|
569 |
|
Total
|
|
|
922 |
|
|
|
937 |
|
(1) | The claims receivable is due from the Cochin International Airport (“CIA”) which is partially owned by the State Government of Kerala. While the Company has initiated collection proceedings in the Commercial Court of Ernakulam, the Company believes it will be difficult to receive the amount in the next 12 months because of the time required for legal collection proceedings. The decrease in claims receivable was mainly due to foreign exchange translation as a result of a decrease in the value of the Indian Rupee. |
| |
(2) | Includes $200 thousand owed to one of our manufacturers for the purchase of equipment. |
NOTE 9 – LEASES
The Company has short-term leases primarily consisting of spaces with the remaining lease term being less than or equal to 12 months. The total short-term lease expense and cash paid for the three months ended June 30, 2022, and 2021 are approximately $45 thousand and $31 thousand, respectively. The Company also has four operating leases as of June 30, 2022.
America: In November 2019, the Company entered into a lease agreement with a lease term of less than 12 months. This lease was amended in March 2020, with a new lease term from March 1, 2020, to November 30, 2025. The annual lease expense is approximately $122 thousand. The lease contract does not contain any material residual value guarantees or material restrictive covenants. The remaining lease term for the operating lease is 3.4 years with a discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.
Asia: The Company renewed three lease agreements for terms between three to four years expiring between 2023 and 2024. The total annual lease expense is approximately $6 thousand. The lease contracts do not contain any material residual value guarantees or material restrictive covenants. The remaining lease term for the operating leases is between 1.75-2.5 years with a discount rate of 7%. The lease does not provide a readily determinable implicit rate. Therefore, the Company discounts lease payments based on an estimate of its incremental borrowing rate.
|
|
(in thousands)
Three months ended
June 30, 2022
($)
|
|
|
(in thousands)
Three months ended
June 30, 2021
($)
|
|
Operating lease costs
|
|
|
37 |
|
|
|
37 |
|
Short term lease costs
|
|
|
45 |
|
|
|
31 |
|
Variable lease costs
|
|
|
- |
|
|
|
- |
|
Total lease costs
|
|
|
82 |
|
|
|
68 |
|
| June 30, 2022, Form 10-Q
Right of use assets and lease liabilities for our operating leases were recorded in the consolidated balance sheet as follows:
|
|
(in thousands)
|
|
|
(in thousands)
|
|
|
|
As of
June 30, 2022
($)
|
|
|
As of
March 31, 2022
($)
|
|
Assets
|
|
|
|
|
|
|
|
|
Operating lease asset
|
|
|
419 |
|
|
|
450 |
|
Total lease assets
|
|
|
419 |
|
|
|
450 |
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accrued liabilities and others (current portion – operating lease liability)
|
|
|
126 |
|
|
|
123 |
|
Noncurrent liabilities:
|
|
|
|
|
|
|
|
|
Operating lease liability (non-current portion – operating lease liability)
|
|
|
308 |
|
|
|
341 |
|
Total lease liability
|
|
|
434 |
|
|
|
464 |
|
|
|
(in thousands)
As of
June 30, 2022
($)
|
|
Supplemental cash flow and non-cash information related to leases is as follows:
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
|
–Operating cash flows from operating leases
|
|
|
26 |
|
Right-of-use assets obtained in exchange for operating lease obligations
|
|
|
419 |
|
As of June 30, 2022, the following table summarizes the maturity of our lease liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June-23
|
|
|
149 |
|
June-24
|
|
|
149 |
|
June-25
|
|
|
133 |
|
June-26
|
|
|
87 |
|
June-27
|
|
|
- |
|
Less: Present value discount
|
|
|
(84 |
) |
Total lease liabilities
|
|
|
434 |
|
NOTE 10 – ACCRUED AND OTHER LIABILITIES
|
|
(in thousands)
|
|
|
|
As of
June 30, 2022
($)
|
|
|
As of
March 31, 2022
($)
|
|
Compensation and other contributions
|
|
|
765 |
|
|
|
1,054 |
|
Provision for expenses
|
|
|
54 |
|
|
|
103 |
|
Other current liability
|
|
|
381 |
|
|
|
300 |
|
Total
|
|
|
1,200 |
|
|
|
1,457 |
|
| June 30, 2022, Form 10-Q
Compensation and other contribution related liabilities consist of accrued salaries to employees. Provision for expenses includes provision for legal, professional, and marketing expenses. Other current liability also includes $126 thousand and $123 thousand of the current operating lease liability and statutory payables of approximately $29 thousand and $55 thousand as of June 30, 2022, and March 31, 2022, respectively.
NOTE 11 – LOANS AND OTHER LIABILITIES
Loan as of June 30, 2022:
On June 11, 2020, the Company received an Economic Injury Disaster Loan (“EIDL”) for approximately $150 thousand at an annual interest rate of 3.75%. The Company must pay principal and interest payments of $731 every month beginning June 5, 2021. The SBA will apply each installment payment first to pay interest accrued to the day SBA receives the payment and will then apply any remaining balance to reduce principal. All remaining principal and accrued interest is due and payable 30 years from the date of the loan. For the three months ended June 30, 2022, the interest expense and principal payment for the EIDL was approximately $1 thousand and $1 thousand respectively and for the three months ended June 30, 2021, the interest expense was approximately $469. As of June 30, 2022, approximately $143 thousand of the loan is classified as Long-term loans and approximately $3 thousand as Short-term loans.
Other Liability:
|
|
(in thousands)
|
|
|
|
As of
|
|
|
|
June 30, 2022
($)
|
|
|
March 31, 2022
($)
|
|
Statutory reserve
|
|
|
16 |
|
|
|
16 |
|
Total
|
|
|
16 |
|
|
|
16 |
|
The statutory reserve is a gratuity reserve for employees in our subsidiaries in India.
NOTE 12 – COMMITMENTS AND CONTINGENCIES
The Company may be involved in legal proceedings, claims, and assessments arising in the ordinary course of business. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. There are no such matters that are deemed material to the condensed consolidated financial statements as of June 30, 2022, except as disclosed in legal proceedings section below.
In the U.S., we provide health insurance, life insurance, and a 401(k) plan wherein the Company matches up to 6% of the employee’s pre-tax contribution up to a maximum annual amount determined by the IRS. In accordance with applicable Indian laws, the Company provides for gratuity, a defined benefit retirement plan (“Gratuity Plan”) covering certain categories of employees. The Gratuity Plan provides a lump sum payment to vested employees, at retirement or termination of employment, an amount based on the respective employee’s last drawn salary and the years of employment with the Company. In addition, employees receive benefits from a provident fund, a defined contribution plan. The employee and employer each make monthly contributions to the plan equal to 12% of the covered employee’s salary. The contribution is made to the Indian Government’s provident fund.
NOTE 13 – SECURITIES
As of June 30, 2022, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001 per share, and 51,840,603 shares of common stock were issued and outstanding. The Company is also authorized to issue up to 1,000,000 shares of preferred stock, par value $0.0001 per share, and no preferred shares were issued and outstanding as of June 30, 2022.
Our common stock is listed on the NYSE American (ticker symbol: IGC). This security also trades on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1). The Company also has 91,472 units outstanding that can be separated into common stock. Ten units may be separated into one share of common stock. The unit holders are requested to contact the Company or our transfer agent, Continental Stock Transfer and Trust, to separate their units into common stock.
| June 30, 2022, Form 10-Q
On January 13, 2021, the Company entered into a Sales Agreement (the “Agreement”) with The Benchmark Company, LLC (the “Sales Agent”) pursuant to which the Sales Agent is acting as the Company’s sales agent with respect to the issuance and sale of up to $75,000,000 of the Company’s shares of common stock, par value $0.0001 per share (the “Shares”), from time to time in an “at the market” (“ATM”) offering as defined in Rule 415(a)(4) of the Securities Act of 1933, as amended.
NOTE 14 – STOCK-BASED COMPENSATION
As of June 30, 2022, under both the Company’s previous 2008 and current 2018 Omnibus Incentive Plans, a total of 8,337,627 shares of common stock have been issued to employees, non-employees, and advisors. In addition, 6.9 million restricted share units (RSUs) fair valued at $6.9 million with a weighted average value of $1 per share, have been granted but not yet issued from different Incentive Plans and Grants. This includes 3.9 million RSUs granted to employees and directors, which consists of a vesting schedule based entirely on the attainment of both operational milestones (performance conditions) and market conditions, assuming continued employment either as an employee or director with the Company. The performance based RSUs are accounted upon certification by Management confirming the probability of achievement of milestones. As of June 30, 2022, Management confirmed two of the milestones had been achieved and rest were considered probable to be achieved by March 31, 2027.
Additionally, options held by advisors and directors to purchase 300 thousand shares of common stock fair valued at $278 thousand with a weighted average of $0.93 per share have been granted but are to be exercised over a service period ending in Fiscal 2031. Options exercised before the service period are expensed when exercised.
The options are valued using a Black-Scholes Pricing Model and Market based RSU are valued based on a lattice model, with the following assumptions:
|
|
Granted in Fiscal 2023
|
|
|
Granted in Fiscal 2022
|
|
Expected life of options
|
|
5 years |
|
|
5 years |
|
Vested options
|
|
|
100 |
%
|
|
|
100 |
%
|
Risk free interest rate
|
|
|
2.64 |
%
|
|
|
2.42 |
%
|
Expected volatility
|
|
|
285 |
%
|
|
|
282 |
%
|
Expected dividend yield
|
|
Nil
|
|
|
Nil
|
|
The expense associated with share-based payments to employees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the Selling, General and Administrative expenses (including research and development). For the three months ended June 30, 2022, the Company’s share-based expense and option-based expense shown in Selling, General and Administrative expenses (including research and development) was $1.14 million and $8 thousand, respectively.
The expense associated with share-based payments to employees, directors, advisors, and contractors is allocated over the vesting or service period and recognized in the Selling, General and Administrative expenses (including research and development). For the three months ended June 30, 2021, the Company’s share-based expense and option-based expense shown in Selling, General and Administrative expenses (including research and development) was $120 thousand and $5 thousand, respectively.
Non-vested shares
|
|
Shares
(in thousands)
(#)
|
|
|
Weighted average
grant date fair value
($)
|
|
Non-vested shares as of March 31, 2022
|
|
|
5,283 |
|
|
|
1.17 |
|
Granted
|
|
|
1,660 |
|
|
|
0.43 |
|
Vested
|
|
|
(1,022 |
) |
|
|
(1.12 |
) |
Cancelled/forfeited
|
|
|
- |
|
|
|
- |
|
Non-vested shares as of June 30, 2022
|
|
|
5,921 |
|
|
|
0.98 |
|
| June 30, 2022, Form 10-Q
Options
|
|
Shares
(in thousands)
(#)
|
|
|
Weighted average
grant date fair value
($)
|
|
|
Weighted average
exercise price
($)
|
|
Options outstanding as of March 31, 2022
|
|
|
300 |
|
|
|
0.93 |
|
|
|
0.34 |
|
Granted
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Exercised
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Cancelled/forfeited
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Options outstanding as of June 30, 2022
|
|
|
300 |
|
|
|
0.93 |
|
|
|
0.34 |
|
There was a combined unrecognized expense of $5 million related to non-vested shares and share options that the Company expects to be recognized over the weighted average life of 3.25 years.
NOTE 15 – FAIR VALUE OF FINANCIAL INSTRUMENTS
As of June 30, 2022, the Company’s marketable securities, if any, may consist of liquid funds, which have been classified as Level 1 of the fair value hierarchy because they have been valued using quoted prices in active markets. The Company’s cash and cash equivalents have also been classified as Level 1 on the same principle. Financial instruments are classified as current if they are expected to be liquidated within the next twelve months. The Company’s remaining investments have been classified as Level 3 instruments as there is little or no market data. Level 3 investments are valued using cost-method. For further information refer to Note 7, “Investments in Non-Marketable Securities.”
The following table presents information about the Company’s assets that are measured at fair value on a recurring basis as of June 30, 2022, and March 31, 2022, and indicates the fair value hierarchy of the valuation techniques the Company used to determine such fair value:
(in thousands)
|
|
Level 1
($)
|
|
|
Level 2
($)
|
|
|
Level 3
($)
|
|
|
Total
($)
|
|
June 30, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
8,053 |
|
|
|
- |
|
|
|
- |
|
|
|
8,053 |
|
Total cash and cash equivalents
|
|
|
8,053 |
|
|
|
- |
|
|
|
- |
|
|
|
8,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Marketable securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
-Non-marketable securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total Investments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
Level 1
($)
|
|
|
Level 2
($)
|
|
|
Level 3
($)
|
|
|
Total
($)
|
|
March 31, 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents:
|
|
|
10,460 |
|
|
|
- |
|
|
|
- |
|
|
|
10,460 |
|
Total cash and cash equivalents
|
|
|
10,460 |
|
|
|
- |
|
|
|
- |
|
|
|
10,460 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Marketable securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
-Non-marketable securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Total investments
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
| June 30, 2022, Form 10-Q
NOTE 16 – SEGMENT INFORMATION
FASB ASC 280, “Segment Reporting” establishes standards for reporting information about reportable segments. Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker, or decision-making group (“CODM”), in deciding how to allocate resources and in assessing performance. The CODM evaluates revenues and gross profits based on product lines and routes to market. Based on our integration and Management strategies, we operate in two reportable segments: (i) Infrastructure segment and (ii) Life Sciences segment.
The Company’s CODM is the Company’s chief executive officer (“CEO”). The CEO reviews financial information presented on an operating segment basis for purposes of making operating decisions and assessing financial performance. Therefore, and before our Life Sciences segment started, the Company determined that it operated in a single operating and reportable segment. As of the date of this report and in preparation for the new and different source of revenue, the Company has determined that it operates in two operating and reportable segments: (a) Infrastructure segment and (b) Life Sciences segment. The Company does not include intercompany transfers between segments for Management reporting purposes.
The following provides information required by ASC 280-10-50-38 “Entity-wide Information”:
1) The table below shows revenue reported by segment:
Products and Services
|
|
(in thousands)
|
|
Segments
|
|
Three months ended
June 30, 2022
($)
|
|
|
Percentage of
Total Revenue
(%)
|
|
|
|
|
|
|
|
|
|
|
Infrastructure segment
|
|
|
10 |
|
|
|
5 |
%
|
Life Sciences segment
|
|
|
202 |
|
|
|
95 |
%
|
Total
|
|
|
212 |
|
|
|
100 |
%
|
|
|
(in thousands)
|
|
Segments
|
|
Three months ended
June 30, 2021
($)
|
|
|
Percentage of
Total Revenue
(%)
|
|
|
|
|
|
|
|
|
|
|
Infrastructure segment
|
|
|
15 |
|
|
|
19 |
%
|
Life Sciences segment
|
|
|
62 |
|
|
|
81 |
%
|
Total
|
|
|
77 |
|
|
|
100 |
%
|
For information for revenue by product and service, refer Note 2, “Summary of Significant Accounting Policies”.
| June 30, 2022, Form 10-Q
2) The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries. Revenue is generally attributed to the geographic location of customers:
|
|
|
|
(in thousands)
|
|
Segments
|
|
Country
|
|
Three months ended
June 30, 2022
($)
|
|
|
Percentage of
Total Revenue
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia
|
|
India
|
|
|
10 |
|
|
|
5 |
%
|
America
|
|
U.S.
|
|
|
202 |
|
|
|
95 |
%
|
Total
|
|
|
212 |
|
|
|
100 |
%
|
|
|
|
|
(in thousands)
|
|
Segments
|
|
Country
|
|
Three months ended
June 30, 2021
($)
|
|
|
Percentage of
Total Revenue
(%)
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia
|
|
India
|
|
|
17 |
|
|
|
22 |
%
|
America
|
|
U.S.
|
|
|
60 |
|
|
|
78 |
%
|
Total
|
|
|
77 |
|
|
|
100 |
%
|
3) The table below shows the non-current assets other than financial instruments held in the country of domicile and foreign countries.
|
|
(in thousands)
|
|
Nature of assets
|
|
USA
(Country of Domicile)
($)
|
|
|
Foreign Countries
(India, Hong Kong, and Colombia)
($)
|
|
|
Total as of
June 30, 2022
($)
|
|
Intangible assets, net
|
|
|
937 |
|
|
|
- |
|
|
|
937 |
|
Property, plant, and equipment, net
|
|
|
4,843 |
|
|
|
4,318 |
|
|
|
9,161 |
|
Claims and advances
|
|
|
550 |
|
|
|
372 |
|
|
|
922 |
|
Operating lease asset
|
|
|
372 |
|
|
|
47 |
|
|
|
419 |
|
Total non-current assets
|
|
|
6,702 |
|
|
|
4,737 |
|
|
|
11,439 |
|
|
|
(in thousands)
|
|
Nature of assets
|
|
USA
(Country of Domicile)
($)
|
|
|
Foreign Countries
(India, Hong Kong, and Colombia)
($)
|
|
|
Total as of
March 31, 2022
($)
|
|
Intangible assets, net
|
|
|
436 |
|
|
|
481 |
|
|
|
917 |
|
Property, plant, and equipment, net
|
|
|
4,978 |
|
|
|
4,441 |
|
|
|
9,419 |
|
Non-marketable securities
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Claims and advances
|
|
|
550 |
|
|
|
387 |
|
|
|
937 |
|
Operating lease asset
|
|
|
396 |
|
|
|
54 |
|
|
|
450 |
|
Total non-current assets
|
|
|
6,360 |
|
|
|
5,363 |
|
|
|
11,723 |
|
NOTE 17 – SUBSEQUENT EVENTS
None to report.
| June 30, 2022, Form 10-Q