# IGC Pharma, Inc.: Form 10-Q for the period ended Sep 30, 2024

- Company: [IGC Pharma, Inc.](/companies/igc.md) (CIK 1326205)
- Form: 10-Q
- Filed: 2024-11-12
- Accepted by EDGAR: Nov 12, 2024, 21:04 ET
- Period: 2024-09-30
- Accession: 0001185185-24-001096
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1326205/000118518524001096/igc20240930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1326205/000118518524001096/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2024-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2024-07-01 to 2024-09-30 | $412.0k | us-gaap:Revenues |
| Revenue | 6 months, 2024-04-01 to 2024-09-30 | $684.0k | us-gaap:Revenues |
| Cost of revenue | 3 months, 2024-07-01 to 2024-09-30 | $214.0k | us-gaap:CostOfRevenue |
| Cost of revenue | 6 months, 2024-04-01 to 2024-09-30 | $323.0k | us-gaap:CostOfRevenue |
| Gross profit | 3 months, 2024-07-01 to 2024-09-30 | $198.0k | us-gaap:GrossProfit |
| Gross profit | 6 months, 2024-04-01 to 2024-09-30 | $361.0k | us-gaap:GrossProfit |
| Research and development | 3 months, 2024-07-01 to 2024-09-30 | $917.0k | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 6 months, 2024-04-01 to 2024-09-30 | $1.8m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2024-07-01 to 2024-09-30 | $1.0m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2024-04-01 to 2024-09-30 | $2.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2024-07-01 to 2024-09-30 | −$1.8m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2024-04-01 to 2024-09-30 | −$4.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2024-07-01 to 2024-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2024-04-01 to 2024-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2024-07-01 to 2024-09-30 | −$1.7m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2024-04-01 to 2024-09-30 | −$4.1m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.02 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2024-04-01 to 2024-09-30 | −$0.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2024-07-01 to 2024-09-30 | −$0.02 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2024-04-01 to 2024-09-30 | −$0.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2024-07-01 to 2024-09-30 | 76,007,129 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2024-04-01 to 2024-09-30 | 74,419,059 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2024-04-01 to 2024-09-30 | −$2.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2024-04-01 to 2024-09-30 | $67.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2024-09-30 | $1.5m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2024-09-30 | $4.3m | us-gaap:AssetsCurrent |
| Total assets | at 2024-09-30 | $10.4m | us-gaap:Assets |
| Current liabilities | at 2024-09-30 | $2.8m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2024-09-30 | $3.0m | us-gaap:Liabilities |
| Long-term debt | at 2024-09-30 | $135.0k | us-gaap:LongTermDebtNoncurrent |
| Short-term borrowings | at 2024-09-30 | $3.0k | us-gaap:ShortTermBorrowings |
| Shareholders' equity | at 2024-09-30 | $7.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,578 characters.

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide an understanding of IGC Pharma, Inc.’s (“IGC,” the “Company,” “we,” “our,” and/or “us”) consolidated financial condition and results of operations and cash flows. The MD&A should be read in conjunction with our unaudited condensed financial statements and related notes that appear elsewhere in this Quarterly Report on Form 10-Q for the three months and six months ended September 30, 2024, and the Annual Report on Form 10-K for the fiscal year ended March 31, 2024, filed with the SEC on June 24, 2024 (the “2024 Form 10-K”). The Company’s actual results could differ materially from those discussed here. Factors that could cause differences include those discussed in the “Forward-Looking Statements” and “Risk Factors” sections and discussed elsewhere in this report. The risks and uncertainties can cause actual results to differ significantly from those in our forward-looking statements or implied in historical results and trends. Accordingly, we caution readers not to place undue reliance on any forward-looking statements made by us, which speak only as of the date they are made. We disclaim any obligation, except as expressly required by law and the rules of the SEC, to publicly update or revise any such statements to reflect any change in our expectations or in events, conditions, or circumstances on which any such statements may be based, or that may affect the likelihood that actual results will differ from those outlined in the forward-looking statements.

### Overview

IGC Pharma is on a mission to transform Alzheimer’s treatment. We are attempting to build a robust pipeline comprising five assets, each targeting different facets of Alzheimer’s disease at various stages of development.

- **IGC-AD1**: Our primary drug candidate, currently undergoing a Phase 2 clinical trial (clinicaltrials.gov, CT05543681), IGC-AD1 holds significant potential in alleviating the burden of agitation in this vulnerable population. This CB1 partial agonist is specifically designed to address neuroinflammation associated with agitation in Alzheimer’s patients.
- **TGR-63**: Through pre-clinical studies, TGR-63 has demonstrated its potential to disrupt the progression of Alzheimer’s by targeting Aβ plaques, a hallmark feature of the disease. This approach offers new avenues for intervening in the underlying pathology of Alzheimer’s.
- **IGC-1C**: At the preclinical stage, we believe IGC-1C represents a forward-thinking approach to Alzheimer’s therapy by targeting tau protein and neurofibrillary tangles, crucial contributors to the neurodegenerative process. By addressing these pathological mechanisms, IGC-1C holds potential for disease-modifying interventions.
- **IGC-M3**: Also in preclinical development, IGC-M3 aims to inhibit the aggregation of Aβ plaques, offering potential therapeutic benefits in early stage Alzheimer’s by targeting the underlying pathology responsible for cognitive decline.
- **LMP**: Designed to target multiple hallmarks of Alzheimer’s disease, including Aβ plaques and neurofibrillary tangles, LMP potentially represents a comprehensive therapeutic approach to addressing the complex pathophysiology of the disease.

In addition to our pipeline of therapeutic candidates, IGC Pharma is attempting to leverage Artificial Intelligence (“AI”) to develop models for the early detection of Alzheimer’s and to optimize clinical trial design. By integrating cutting-edge technology with innovative drug development, we are striving to make significant steps in the fight against Alzheimer’s disease.

Furthermore, IGC controls a total of 26 patent filings reflecting our commitment to innovation and intellectual property protection, including for IGC-AD1. Our patent portfolio underscores our dedication to safeguarding our competitive advantage in the market.

IGC Pharma Inc., is a Maryland corporation established in 2005 with a fiscal year ending on March 31, spanning a 52- or 53-week period.

IGC has two segments: Life Sciences Segment and Infrastructure Segment.

### Life Sciences Segment

IGC Pharma, a clinical-stage company developing treatments for Alzheimer’s disease, is committed to transforming patient care by striving to offer faster acting and more effective solutions. Our lead drug, IGC-AD1, embodies this vision by tackling a critical challenge – managing agitation in Alzheimer’s dementia. Early results from our Phase 2 trial are promising: IGC-AD1 effectively reduced agitation in patients compared to a placebo, and crucially, it did so much faster than traditional medications. While existing anti-psychotics can take as long as 6 to 12 weeks to show effects, IGC-AD1 has the potential to act within 2 weeks. This significantly faster onset of action could significantly improve patient care and represents a potential breakthrough in managing Alzheimer’s-related agitation, although there can be no assurance thereof. In addition, we have created in-house wellness brands, available through online channels that are compliant with relevant federal, state, and local laws and regulations. We derive revenue from our in-house wellness non-pharmaceutical formulations that are manufactured as non-GMO, vegan, products at our facility and are sold over-the-counter (“OTC”).

### Infrastructure Segment

The Company’s infrastructure business has been operating since 2008, it includes (i) execution of construction contracts and (ii) rental of heavy construction equipment.

### Contract Research Organization (CRO) and Clinical Trial Software

The IGC-Pharma Electronic Data Capture system (“IGC-EDC”) is a secure and user-friendly data management software designed to collect electronic clinical trial data. It includes rigorous security measures to protect data and ensure compliance with regulations. The system is designed for our Phase 2 trial and can store and organize various handwritten source documents. This allows users to generate data reports for analysis and computational models to simulate the effects of our investigational drug IGC-AD1.

Recognizing the importance of operational excellence and cost management in clinical trials, we have established an internal CRO with proprietary software to reduce trial costs compared to using external CROs. Additionally, we are integrating machine learning and AI into the software framework for improved decision-making, data entry, computational models, trial design (Phase 3), and data analysis.

### Our Business Strategy

The business strategy includes:

- Subject to FDA approval and clinical trials, developing IGC-AD1 as a drug for treating agitation in dementia due to Alzheimer’s.
- Subject to FDA approval, developing IGC-AD1 as a drug for treating Alzheimer’s disease.
- Developing TGR-63 for the potential treatment of Alzheimer’s disease.
- Driving revenue from in-house OTC brands and formulations.
- Allocate capital to enhance shareholder value.

We believe developing a drug for both symptom and disease-modifying agents has less risk due to the need for expensive multi-year trials. However, there is considerable upside and significant value creation to the extent we obtain a first-in-class advantage, of which there can be no assurance. If we were to obtain a first-in-class advantage, such an advantage could result in significant growth if and when an approved drug such as IGC-AD1 launches.

We believe that additional investment in clinical trials, AI, R&D, facilities, marketing, advertising, and acquisition of complementary products and businesses will be critical to the ongoing growth of the Life Sciences segment. Although there can be no assurance, we believe these investments will fuel the development and delivery of innovative products that drive positive patient and customer experiences. We hope to leverage our R&D and intellectual property to develop ground-breaking, science-based products that are proven effective through clinical trials, subject to FDA approval. Although there can be no assurance, we believe this strategy can improve our existing products and lead to the creation of new products that can provide treatment options for multiple conditions, symptoms, and side effects.

### Company Highlights for the Quarter ended September 30, 2024

- On September 4, 2024, the Company announced the advancement of its proprietary formulation, IGC-AD1, toward clinical trials as a potential anti-amyloid disease-modifying treatment for Alzheimer’s disease.
- On August 22, 2024, the Company announced preclinical research demonstrating the therapeutic potential of IGC-1C, a novel small-molecule modulator.
- As a result of AI modeling, on August 20, 2024, the Company announced that a proprietary molecule, IGC-1A, has been identified as a potential GLP-1 agonist. Identifying IGC-1A as a potential GLP-1 agonist marks a significant milestone for IGC Pharma, presenting a substantial market opportunity and improving patient care for various conditions.
- On July 9, 2024, the Company announced preclinical analyses of TGR-63 to demonstrate blood-brain barrier permeability and safety profile.

\| September 30, 2024, Form 10-Q

### Results of Operations for the Three Months Ended September 30, 2024, and September 30, 2023

The historical results presented below are not necessarily indicative of the results that may be expected for any future period. The following table presents an overview of our results of operations for the three months ended September 30, 2024, and September 30, 2023:

### Statement of Operations (in thousands, unaudited)

|  | Three months ended September 30, 2024 ($) | 2023 ($) | Change ($) | Percent Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | 412 | 291 | 121 | 42% |
| Cost of revenue | (214) | (117) | (97) | 83% |
| **Gross profit** | **198** | **174** | 24 | 14% |
| Selling, general and administrative expenses | (1,041) | (1,397) | 356 | (25)% |
| Research and development expenses | (917) | (1,268) | 351 | (28)% |
| **Operating loss** | **(1,760)** | **(2,491)** | 731 | (29)% |
| Other income, net | 43 | 40 | 3 | 8% |
| **Loss before income taxes** | **(1,717)** | **(2,451)** | 734 | (30)% |
| Income tax expense/benefit | - | - | - | - |
| **Net loss** | **(1,717)** | **(2,451)** | 734 | (30)% |

*Revenue –* Revenue was approximately $412 thousand and $291 thousand for the three months ended September 30, 2024, and September 30, 2023, respectively. Revenue in both quarters was primarily derived from our Life Sciences segment, which involved providing white-label manufactured products and sales of holistic health care products, among others. The increase in revenue is attributed to the white-label project in the U.S. The Company is committed to its current strategy of driving sales in formulations both as branded and white-labeled products in the Life Science segment.

*Cost of revenue –* Cost of revenue amounted to approximately $214 thousand for the three months ended September 30, 2024, compared to $117 thousand in the three months ended September 30, 2023, this represents gross margins of 48% and 60%, respectively. The cost of revenue is primarily attributable to the cost of raw materials, labor, and other direct overheads required to produce our products in the Life Science segment. Typically, the gross margin in the Life Sciences business will fluctuate from one quarter to another based on the mix within the Life Sciences business between white label, private label, and branded products. There is insufficient revenue to model or project gross margins.

*Selling, general and administrative expenses (“SG&A”)–* 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. During the three months that ended September 30, 2024, SG&A expenses decreased by approximately $356 thousand or 25% to approximately $ 1 million during the three months ended September 30, 2024. The decrease of $356 thousand is attributed to a decrease in marketing and corporate expenses.

*Research and development expenses (“R&D”)–* R&D expenses were attributed to our Life Sciences segment. The R&D expenses decreased by approximately $351 thousand or 28% to approximately $917 thousand during the three months ended September 30, 2024, from approximately $1.3 million. It is primarily attributable to the progression of Phase 2 trials on IGC-AD1 and pre-clinical studies on the other small molecule assets. We anticipate increased R&D expenses as the development of our other small molecule assets targeting Alzheimer’s and the Phase 2 trial on Alzheimer’s expand.

*Other income, net –* Other net income increased by approximately $3 thousand or 8% during the thousand months ended September 30, 2024. As a result, the total other income for the three months ended September 30, 2024, and 2023 is approximately $43 thousand and $40 thousand, respectively. Other income includes interest and rental income, dividend income, profit from the sale of assets, unrealized gains from investments, net income, and income from scrap sales.

### Results of Operations for the Six Months Ended September 30, 2024, and September 30, 2023

The historical results presented below are not necessarily indicative of the results that may be expected for any future period. The following table presents an overview of our results of operations for the six months ended September 30, 2024, and September 30, 2023:

### Statement of Operations (in thousands, unaudited)

|  | Six months ended September 30, 2024 ($) | 2023 ($) | Change ($) | Percent Change |
| --- | ---: | ---: | ---: | ---: |
| Revenue | 684 | 846 | (162) | (19)% |
| Cost of revenue | (323) | (417) | 94 | (23)% |
| **Gross profit** | **361** | **429** | (68) | (16)% |
| Selling, general and administrative expenses | (2,711) | (3,044) | 333 | 11% |
| Research and development expenses | (1,806) | (2,015) | 209 | 10% |
| **Operating loss** | **(4,156)** | **(4,630)** | 474 | 10% |
| Other income, net | 61 | 104 | (43) | (41)% |
| **Loss before income taxes** | **(4,095)** | **(4,526)** | 431 | (10)% |
| Income tax expense/benefit | - | - | - | - |
| **Net loss** | **(4,095)** | **(4,526)** | 412 | (10)% |

*Revenue –* Revenue was approximately $684 thousand and $846 thousand for the six months ended September 30, 2024, and September 30, 2023, respectively. Revenue in both quarters was primarily derived from our Life Sciences segment, which involved providing white-label manufactured products and sales of holistic health care products, among others. The decrease in revenue is attributed to the completion of our Infrastructure project in India as well as the white-label project in the U.S. The Company is committed to its current strategy of driving sales in formulations both as branded and white-labeled products in the Life Science segment.

*Cost of revenue –* Cost of revenue amounted to approximately $323 thousand for the six months ended September 30, 2024, compared to $417 thousand in the six months ended September 30, 2023, this represents gross margins of 53% and 51%, respectively. The cost of revenue is primarily attributable to the cost of raw materials, labor, and other direct overheads required to produce our products in the Life Science segment. Typically, the gross margin in the Life Sciences business will fluctuate from one quarter to another based on the mix within the Life Science business between white label, private label, and branded products. There is insufficient revenue to model or project gross margins.

*SG&A–* 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. During the six months that ended September 30, 2024, SG&A expenses decreased by approximately $333 thousand or 11% to approximately $2.7 million during the six months ended September 30, 2024, from approximately $3 million. The decrease of $333 thousand is attributed to a decrease in marketing and corporate expenses.

*R&D–* R&D expenses were attributed to our Life Sciences segment. The R&D expenses decreased by approximately $209 thousand or 10% to approximately $1.8 million during the six months ended September 30, 2024, from approximately $2 million. It is primarily attributable to the progression of Phase 2 trials on IGC-AD1 and pre-clinical studies on the other small molecule assets. We anticipate increased R&D expenses as the development of our other small molecule assets targeting Alzheimer’s and the Phase 2 trial on Alzheimer’s expand.

*Other income, net –* Other net income decreased by approximately $43 thousand or 41% during the thousand six months ended September 30, 2024. As a result, the total other income for the six months ended September 30, 2024, and 2023 is approximately $61 thousand and $104 thousand, respectively. Other income includes interest and rental income, dividend income, profit from the sale of assets, unrealized gains from investments, net income, and income from scrap sales.

### 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,” and Note 11, “Loans and Other Liabilities,” in Item 1 of this report for further information on Company commitments and contractual obligations.

Pursuant to the signed 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, signed two SPAs to raise $6 million in exchange for approximately 18.8 million shares. Out of $6 million, the Company received $2.5 million during the quarter ended June 30, 2024. 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. Please refer to Note 13 – “Securities”, for more information.

On July 29, 2024, the Company entered into an amendment to extend the Credit Agreement with O-Bank, CO., LTD, 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 Credit Agreement remain unchanged.

On October 27, 2023, the Company entered into a Sales Agreement (the “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, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $60 million (“Shares”), 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”).

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 the 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 April 2024.

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 will receive piggyback registration rights subject to certain restrictions.

The Company expects to raise further capital for its research and development initiatives 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 a statement on Form S- 3 to raise capital through at-the-market offerings or otherwise.

*(in thousands, unaudited)*

|  | As of September 30, 2024 ($) | As of March 31, 2024 ($) | Change | Percent Change |
| --- | ---: | ---: | ---: | ---: |
| Cash and cash equivalents | 1,546 | 1,198 | 348 | 29% |
| Working capital | 1,447 | 1,365 | 82 | 6% |

#### Cash and cash equivalents

Cash and cash equivalents increased by approximately $348 thousand to $1.5 million in the six months ended September 30, 2024, from $1.2 million as of March 31, 2024, an increase of approximately 29%. The increase is primarily attributable to the fund raised by the Company during the quarter ended September ended 30, 2024.

#### Summary of Cash flows

*(in thousands, unaudited)*

|  | Six months ended September 30, 2024 | 2023 | Change | Percent Change |
| --- | ---: | ---: | ---: | ---: |
| Cash used in operating activities | (2,748) | (3,086) | 338 | (11)% |
| Cash (used in) provided by investing activities | (196) | 67 | (263) | (393)% |
| Cash provided by financing activities | 3,301 | 2,858 | 443 | 15% |
| Effects of exchange rate changes on cash and cash equivalents | (9) | (9) | - | 100% |
| **Net increase (decrease) in cash and cash equivalents** | **348** | **(170)** | **517** | **(305)%** |
| Cash and cash equivalents at the beginning of period | 1,198 | 3,196 | (1,998) | (63)% |
| **Cash and cash equivalents at the end of the period** | **1,546** | **3,026** | **(1,481)** | **(49)%** |

#### Operating Activities

Net cash used in operating activities for the six months ended September 30, 2024, was approximately $2.7 million. It consists of a net loss of approximately $4.1 million, a positive impact on cash due to non-cash expenses of approximately $1.1 million, and a positive change in operating assets and liabilities of approximately $249 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $307 thousand and stock-based expenses of approximately $804 thousand. In addition, changes in operating assets and liabilities had a positive impact of approximately $249 thousand on cash, of which a net negative impact of approximately $227 thousand is due to an increase in deposits and advances, and a positive impact of approximately $467 thousand is due to increase in accrued and other liabilities, a net negative impact of approximately $5 thousand is due to an increase in accounts payable and net other current assets and liabilities of approximately $14 thousand.

Net cash used in operating activities for the six months ended September 30, 2023, was approximately $3.1 million. It consists of a net loss of approximately $4.5 million, a positive impact on cash due to non-cash expenses of approximately $1.1 million, and a positive change in operating assets and liabilities of approximately $272 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $313 thousand, stock-based expenses of approximately $907 thousand, and an approximately $52 thousand decrease in other non-cash items and approximately $42 thousand decrease in profit on sale of assets. In addition, changes in operating assets and liabilities had a positive impact of approximately $272 thousand on cash, of which approximately $30 thousand is due to a decrease in accounts receivables, approximately $19 thousand increase in accounts payable, approximately $185 thousand increase in accrued and other liabilities and approximately $98 thousand increase in other net current assets and liabilities.

#### Investing Activities

Net cash used in investing activities for the six months ended September 30, 2024, was approximately $196 thousand, which is comprised of expenses of approximately $145 thousand for the acquisition, and development of intangible assets, and approximately $51 thousand for the net purchase of property, plant, and equipment.

Net cash provided by investing activities for the six months ended September 30, 2023, was approximately $67 thousand, which is comprised of expenses of approximately $48 thousand for the acquisition filing expenses related to intellectual property, approximately $13 thousand for the net purchase of property, plant, and equipment and approximately $128 thousand of investment in marketable securities.

#### Financing Activities

Net cash provided by financing activities was approximately $3.3 million for the six months ended September 30, 2024, which is comprised of net proceeds from issuance of equity stock of approximately $3.3 million, and re-payment of the loan of approximately $2 thousand. Please refer to Note 13 – “Securities”, for more information.

Net cash provided by financing activities was approximately $2.8 million for the six months ended September 30, 2023, which is comprised of net proceeds from issuance of equity stock of approximately $2.8 million and re-payment of the loan of approximately $2 thousand.

### 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.

### Critical Accounting Policies

While all accounting policies impact 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, inventory, accounts receivable, foreign currency translation, impairment of long-lived assets and investments, stock-based compensation, and cybersecurity.

Please see our disclosures in Note 2 – Summary of Significant Accounting Policies to the Notes to the Unaudited Condensed Consolidated Financial Statements in this report, in the Notes to the Audited Consolidated Financial Statements in the 2024 Form 10-K, as well as Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations in the 2024 Form 10-K, for a discussion of all our critical and significant accounting policies.

### Recent Accounting Pronouncements

Changes to U.S. GAAP are established by the Financial Accounting Standards Board (”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. Newly issued ASUs not listed are expected to have no impact on the Company’s consolidated financial position and results of operations because either the ASU is not applicable, or the impact is expected to be immaterial. Recent accounting pronouncements that may apply to us are described in Note 2, “Significant Accounting Policies” to the Notes to the Unaudited Condensed Consolidated Financial Statements in this report and in the Notes to the Audited Consolidated Financial Statements in Part II of our 2024 Form 10-K.

## Controls and procedures

As filed, 2,351 characters.

### Evaluation of Disclosure Controls and Procedures

Our Management maintains disclosure controls and procedures as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act is processed, recorded, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to Management, including our Chief Executive Officer (our principal executive officer) and Principal Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our Management, including the Chief Executive Officer and Principal Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective in ensuring that the information required to be disclosed in the reports filed or submitted by us under the Exchange Act was recorded, processed, summarized and reported within the requisite time periods specified in SEC rules and forms and that such information was accumulated and communicated to our Management, including our Chief Executive Officer and Principal Financial Officer, as appropriate to allow for timely decisions regarding required disclosure.

### Changes in Internal Control over Financial Reporting

Our Management, including our Chief Executive Officer and Principal Financial Officer, evaluated our “internal control over financial reporting” as defined in Exchange Act Rule 13a-15(f) to determine whether any changes in our internal control over financial reporting occurred during the three months ended September 30, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, there were no changes in our internal control over financial reporting during the three months ended September 30, 2024, that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

## Risk factors

As filed, 206 characters.

There have been no material changes to the risk factors disclosed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended March 31, 2024, filed with the SEC on June 24, 2024.

Filed Nov 12, 2024.
Source: SEC EDGAR, the filing index for accession 0001185185-24-001096. Last ingested by Listed: Oct 24, 2026, 15:11 ET. No prices; not investment advice.