# IGC Pharma, Inc.: Form 10-Q for the period ended Sep 30, 2017

- Company: [IGC Pharma, Inc.](/companies/igc.md) (CIK 1326205)
- Form: 10-Q
- Filed: 2017-11-17
- Accepted by EDGAR: Nov 17, 2017, 17:03 ET
- Period: 2017-09-30
- Accession: 0001185185-17-002428
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1326205/000118518517002428/indiaglobalization10q093017.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1326205/000118518517002428/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2017-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2017-07-01 to 2017-09-30 | $235.6k | us-gaap:Revenues |
| Revenue | 6 months, 2017-04-01 to 2017-09-30 | $288.6k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2017-07-01 to 2017-09-30 | $163.2k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2017-04-01 to 2017-09-30 | $170.1k | us-gaap:CostOfRevenue |
| Selling, general and administrative | 3 months, 2017-07-01 to 2017-09-30 | $331.1k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2017-04-01 to 2017-09-30 | $710.0k | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2017-07-01 to 2017-09-30 | −$263.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2017-04-01 to 2017-09-30 | −$601.7k | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2017-07-01 to 2017-09-30 | $40.8k | us-gaap:InterestExpense |
| Interest expense | 6 months, 2017-04-01 to 2017-09-30 | $85.4k | us-gaap:InterestExpense |
| Income tax | 3 months, 2017-07-01 to 2017-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2017-04-01 to 2017-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2017-07-01 to 2017-09-30 | −$303.8k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2017-04-01 to 2017-09-30 | −$678.4k | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2017-07-01 to 2017-09-30 | −$0.01 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2017-04-01 to 2017-09-30 | −$0.02 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2017-07-01 to 2017-09-30 | −$0.01 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2017-04-01 to 2017-09-30 | −$0.02 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2017-07-01 to 2017-09-30 | 29,051,771 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2017-04-01 to 2017-09-30 | 29,051,771 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2017-04-01 to 2017-09-30 | −$627.5k | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2017-04-01 to 2017-09-30 | $927 | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2017-09-30 | $597.0k | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2017-09-30 | $2.0m | us-gaap:AssetsCurrent |
| Total assets | at 2017-09-30 | $10.0m | us-gaap:Assets |
| Current liabilities | at 2017-09-30 | $1.2m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2017-09-30 | $3.8m | us-gaap:Liabilities |
| Long-term debt | at 2017-09-30 | $350.8k | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2017-09-30 | $6.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 15,233 characters.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q, and the Annual Report on Form 10-K filed with the SEC on July 14, 2017. In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed in our Annual Report on Form 10-K filed with the SEC on July 14, 2017, including the risk factors set out in Item 1A therein. Therefore, the financial statements included in this Report should be read in conjunction with the audited Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K filed with the SEC on July 14, 2017.

### Company Background

IGC, a Maryland based corporation, develops cannabis-based combination therapies to treat Alzheimer’s, pain, nausea, eating disorders, several end points of Parkinson’s, and epilepsy in humans, dogs and cats. In support of this effort, IGC has assembled a portfolio of patent filings and four lead product candidates addressing these conditions. In India, the Company is engaged in heavy equipment rental, and in Malaysia, real-estate management.

### Business Strategy

Our long-term goal is to establish IGC as a specialty-pharmaceutical provider of phytocannabinoid-based pharmaceutical and Complimentary Alternative Medicine (“CAM”, “nutraceutical”) products. Our short-term goal is to conduct human and veterinarian medical trials on our four product candidates. Our medium-term goal is to market CAM based therapies through joint ventures and partnerships.

### Business Organization

We are a Maryland corporation formed in April 2005. In March 2006, we completed an initial public offering of our common stock. Our principal office in the U.S. is in Bethesda Maryland, in addition we have a facility in Washington State. Our back office is located in Kochi, Kerala India. In addition, many of our staff and advisors work from their home offices. We maintain a website at http://www.igcinc.us and our telephone number is +1-301-983-0998. The information contained on our website is not incorporated by reference in this report, and you should not consider it a part of this report. As of September 30, 2017, our operational subsidiaries are located in India and Malaysia. Our filings are available on www.sec.gov.

### Products

Cannabinoids are chemical compounds that exert a range of effects on the body, including impacting the immune response, gastrointestinal maintenance and motility, muscle functioning, and nervous system response and functioning. Phytocannabinoids are cannabinoids that occur naturally in the cannabis plant, they are abundant in the viscous resin produced by glandular structures called trichomes. There are over 480 different compounds in the cannabis plant. Many of them have been identified as cannabinoids. Of these THC (delta-9-tetrahydrocannabinol) is the main psychoactive component (“high”) in the plant with many therapeutic uses. The other broadly pursued non-psychoactive phytocannabinoid, CBD (Cannabidiol), is pleiotropic influencing many pathways in humans, dogs, and cats and may be used to provide relief to a variety of symptoms including pain, seizures, and eating disorders.

The Company is focused on four products that it is preparing for medical trials: Natrinol is a natural substitute for Marinol, or synthetic THC. This product is aimed at relieving nausea, vomiting and increasing appetite in patients with AIDS and Cancer. Caesafin uses combination therapy to alleviate seizures in dogs and cats. Serosapse addresses several end points in Parkinson’s disease including Rapid Eye Movement (REM) sleep disorder, anxiety, and dyskinesia. Hyalolex is aimed at reducing the buildup of beta-amyloid in Alzheimer’s patients.

### Services

The Company provides construction management services for the construction of a 7-star hotel in Genting Malaysia through its subsidiary Cabaran Ultima. In India, through its subsidiary Techni Bharati Private Limited, the Company rents heavy equipment with operators to construction companies.

### Patents, Development Pipeline, and Licenses

Although, the Company believes the registration of patents is an important part of its business strategy and its success depends in part on such registration, the Company cannot guarantee that such patent filings will result in a successful registration with the USPTO. Please see risk factors.

We have filed six provisional patents with the United States Patent and Trademark Office (“USPTO”), in the phytocannabinoid-based combination therapy space, for the indications of pain, medical refractory epilepsy, and cachexia. In addition, in May 2017, we acquired an exclusive license to a patent filed by the University of South Florida Research Foundation entitled “THC as a Potential Therapeutic Agent for Alzheimer’s Disease”. The table below provides a status of the patent filings:

| Indication | Provisional Filing | PCT Filing | Subsequent Activity |
| --- | --- | --- | --- |
| Pain (IGC-501) | 9/16/14 | 9/16/15 | US National Case Filed – 6/15/16 |
| Seizures (IGC-502) | 6/15/15 | 6/14/16 | US National Case Filed – 6/15/16 |
| Seizures (IGC-503) | 4/1/15 | 4/1/16 | PCT Application Published- 10/6/16 |
| Eating Disorders (IGC-504) | 8/12/15 | 8/11/16 | US and National Filing Anticipated 2/12/18 |
| Seizures (IGC-505) | 6/15/16 | 6/15/16 | US National Filing Anticipated 12/15/18 |
| Eating Disorders (IGC-506) | 2/28/17 | Anticipated- 2/28/18 | US and National Filing Anticipated 8/28/19 |
| Alzheimer’s (IGC-AD1) | 7/30/2015 | Anticipated -2017 | US and National Filing Anticipated in 2017 |

For more in-depth information regarding our industry, products, services and corporate history, please refer to the Company’s Annual Report on Form 10-K filed with the SEC on July 14, 2017.

### Results of Operations

### Three Months ended September 30, 2017 Compared to Three Months ended September 30, 2016

*Revenue -* Total revenue was $235,648 for the three months ended September 30, 2017 as compared to $162,163 for the three months ended September 30, 2016. In the three-month period ended September 30, 2016, the revenue consisted of trading, real estate management and rental of heavy equipment. The increase in revenue during the same period in 2017 is from the steel trading, real estate management and from rental business. We continue to operate the real estate management and rental of heavy equipment businesses.

*Cost of Revenue (excluding depreciation) –* Cost of revenue for the three months ended September 30, 2017 was $163,170 as compared to $90,534 for the three months ended September 30, 2016. The increase in cost of revenue stems from an increase in the volume of business as reflected in the revenue and is related to steel trading and real estate and rental business.

*Selling, General and Administrative* - Selling, general and administrative expenses were $331,146 for the three months ended September 30, 2017 as compared to $339,585 for the three months ended September 30, 2016. Most of the expenses are public-company related expenses, including legal fees.

*Depreciation –* The depreciation expense was approximately $4,344 in the three months ended September 30, 2017 as compared to $97,842 in the three months ended September 30, 2016. The decrease in depreciation is from the curtailment of the iron-ore mining business in China.

*Interest and other financial expenses –* The interest expense and other financial expenses for the three months ended September 30, 2017 were approximately $40,832 as compared to approximately $51,410 for the three months ended September 30, 2016. Most of the interest is paid with common shares of the Company and is therefore non-cash.

*Other income/(loss) –* Other income was $(144) for the three-month period ended September 30, 2017 as compared to $11,985 in September 30, 2016. Other income includes the rent of apartment owned by one of the subsidiaries and the income by supply of skilled operators for the heavy equipment rental business.

*Consolidated Net Income/(loss) –* In the three months ended September 30, 2017, the Company reported a GAAP net income loss of $303,804 and a GAAP EPS loss of $0.01 compared to a GAAP net income loss of $583,871 and a GAAP EPS loss of $0.02 for the three months ended September 30, 2016.

### Six Months ended September 30, 2017 Compared to Six Months ended September 30, 2016

*Revenue -* Total revenue was $288,573 for the six months ended September 30, 2017 as compared to $237,563 for the six months ended September 30, 2016. In the six-month period ended September 30, 2016, the revenue consisted of trading, real estate management and rental of heavy equipment. We continue to operate the real estate management and rental of heavy equipment businesses.

*Cost of Revenue (excluding depreciation) –* Cost of revenue for the six months ended September 30, 2017 was $170,051 as compared to $154,589 for the six months ended September 30, 2016. The increase in cost of revenue stems from an increase in the volume of business as reflected in the increase in revenue and is related to the steel trading, real estate and rental business.

*Selling, General and Administrative* - Selling, general and administrative expenses were $709,960 for the six months ended September 30, 2017 as compared to $636,802 for the six months ended September 30, 2016. Most of the expenses are public-company related expenses, including legal fees.

*Depreciation –* The depreciation expense was approximately $10,309 in the six months ended September 30, 2017 as compared to $195,514 in the six months ended September 30, 2016. The decrease in depreciation is from the curtailment of the iron-ore mining business in China.

*Interest and other financial expenses –* The interest expense and other financial expenses for the six months ended September 30, 2017 were approximately $85,378 as compared to approximately $89,956 for the six months ended September 30, 2016. Most of the interest is paid with common shares of the Company and is therefore non-cash.

*Other income/(loss) –* Other income was $8,210 for the six-month period ended September 30, 2017 as compared to $13,740 in September 30, 2016. Other income includes the rent of apartment owned by one of the subsidiaries and the income by supply of skilled operators for the heavy equipment rental business.

*Consolidated Net Income/(loss) –* In the six months ended September 30, 2017, the Company reported a GAAP net income loss of $678,411 and a GAAP EPS loss of $0.02 compared to a GAAP net income loss of $998,040 and a GAAP EPS loss of $0.02 for the six months ended September 30, 2016.

### Off-Balance Sheet Arrangements

We do not have any undisclosed investments in special purpose entities or undisclosed borrowings or debt.

### Liquidity and Capital Resources

This liquidity and capital resources discussion compares the consolidated company financial position for the six-month periods ended September 30, 2017 and 2016.

During the six months ended September 30, 2017, cash used in operating activities was $627,513 compared to $676,728 used during the six months ended September 30, 2016.

During the six months ended September 30, 2017, $148,112 of cash was used in s activities from continuing operations as compared to $155,347 used during the same period in 2016.

For the quarter ended September 30, 2017, our non-GAAP cash burn was approximately $268,536 after adjusting for $4,344 of depreciation, $30,900 of non-cash interest and $24 bad debts.

At the end of September 30, 2017, our cash and cash equivalents along with restricted cash was $597,026 and working capital of $803,769. We expect to raise money to further our patent portfolio, testing and commence marketing and licensing our Alzheimer’s product, one of the Company’s four cannabis-related health products.

### Critical Accounting Policies

While all accounting policies impact the financial statements, certain policies may be viewed as critical. Critical accounting policies are those that are both most important to the portrayal of financial condition and results of operations and that require management’s most subjective or complex judgments and estimates. Our management believes the policies that fall within this category are the policies on revenue recognition, accounting for stock-based compensation, goodwill, and income taxes.

Please see our disclosures on Note 2 - Summary of Significant Accounting Policies of the Notes to the unaudited Consolidated Financial Statements in this report and Note 2 - Significant Accounting Policies of the Notes to the audited Consolidated Financial Statements in Part II of our Annual Report on Form 10-K, filed with the SEC on July 14, 2017 for a discussion of all our significant accounting policies.

### Forward-Looking Statements and Important Factors

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. This report and the documents incorporated in this report by reference contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Additionally, we, or our representatives may, from time to time, make other written or verbal forward-looking statements and discuss plans, expectations and objectives regarding our business, financial condition and results of operations. Without limiting the foregoing, statements that are in the future tense, and all statements accompanied by terms such as “believe,” “project,” “expect,” “trend,” “estimate,” “forecast,” “assume,” “intend,” “plan,” “target,” “anticipate,” “outlook,” “preliminary,” “will likely result,” “will continue” and variations of them and similar terms are intended to be “forward-looking statements” as defined by federal securities laws. We caution you not to place undue reliance on forward-looking statements, which are based upon assumptions, expectations, plans and projections. Forward-looking statements are based upon certain assumptions and subject to risks and uncertainties, including those identified in the “Risk Factors” included in our annual report on Form 10-K for the fiscal year ending March 31, 2017, filed with the SEC on July 14, 2017, and in the documents incorporated by reference that may cause actual results to differ materially from those expressed or implied in the forward-looking statements. Forward-looking statements speak only as of the date when they are made. Except as required by federal securities law, we do not undertake any obligation to update forward-looking statements to reflect events, circumstances, changes in expectations, or the occurrence of unanticipated events after the date of those statements.

## Market risk

As filed, 159 characters.

Pursuant to Item 305(e) of Regulation S-K, the Company is not required to provide the information required by this Item as it is a “smaller reporting company.”

## Controls and procedures

As filed, 1,994 characters.

### Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this report, management conducted an evaluation, under the supervision and with the participation of its Chief Executive Officer (CEO) and its principal financial and accounting officer (PFAO), of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 of the Securities Exchange Act of 1934. Based upon that evaluation, our CEO and PFAO concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports under the Exchange Act is recorded, processed and reported within the time periods specified in the SEC rules and forms; and accumulated and communicated to the Company’s management, including its principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

There were no changes in our internal controls over financial reporting during our fiscal quarter ended September 30, 2017 which were identified in conjunction with Management’s evaluation required by paragraph (d) of Rule 13a-15 and 15d-15 under the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

### Limitations on the Effectiveness of Disclosure Controls and Procedures

Our management, including our CEO and PFAO, do not expect that our internal control over financial reporting will prevent all errors and all fraud. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree or compliance with the policies or procedures may deteriorate.

## Risk factors

As filed, 179 characters.

There have not been any material changes with regard to the risk factors previously disclosed in the Company’s annual report on Form 10-K for the fiscal year ended March 31, 2017.

Filed Nov 17, 2017.
Source: SEC EDGAR, the filing index for accession 0001185185-17-002428. Last ingested by Listed: Nov 6, 2026, 16:27 ET. No prices; not investment advice.