INDIA GLOBALIZATION CAPITAL, INC. Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

The purpose of this Management's Discussion and Analysis ("MD&A") is to provide
an understanding of the Company's consolidated financial condition and results
of operations and cash flows, and 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 ended June 30, 2022,
and the Annual Report on Form 10-K for the fiscal year ended March 31, 2022
filed with the SEC on June 23, 2022 (the "2022 Form 10-K"). The 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, as well as 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. We caution readers not to place undue reliance on any forward-looking
statements made by us, which speak only as of the date they are made. We
disclaim any obligation, except as specifically required by law and the rules of
the SEC, to publicly update or revise any such statements to reflect any change
in our expectations or in events, conditions, or circumstances on which any such
statements may be based, or that may affect the likelihood that actual results
will differ from those set forth in the forward-looking statements.



Overview


IGC has two segments: Life Sciences and Infrastructure.



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 includes our over-the-counter (“OTC”) products and our biopharmaceuticals.




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.



? Holief™ is a line of all-natural, non-GMO, vegan over-the-counter products intended for

           at treating menstrual cramps (dysmenorrhea) and premenstrual symptoms
           ("PMS").




        ?  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,

B vitamins,

           vitamin C, and no caffeine.



Both Holief™ and Sunday Seltzer™ comply with applicable 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 A? plaques.





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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).



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.



Company Highlights


? The Company initiated a protocol entitled “A Phase 2, Multi-Center,

Double-blind, randomized, placebo-controlled trial of safety and efficacy

of IGC-AD1 on agitation in participants with dementia due to Alzheimer’s disease

disease.” The protocol is fed to 146 Alzheimer’s patients with half

receiving a placebo and is a parallel group superiority study. While subject to

changes, we plan to conduct the trial at three sites, one in Canada And two

in the WE Primary endpoint is agitation in dementia due to Alzheimer’s disease

illness as assessed by the Cohen-Mansfield Agitation Inventory (CMAI) on a

    six-week period.




? On June 7, 2022the USPTO issued a patent (#11,351,152) to the company titled

“Method and Composition for the Treatment of Seizure Disorders.” The patent concerns

compositions and methods for treating several types of seizure disorders

and epilepsy in humans and animals using a combination of CBD with other

compounds. Subject to further research and study, the combination is intended

to reduce the side effects caused by hydantoin-based anticonvulsant medicines such as

phenobarbital, by reducing the dosage of anticonvulsants in humans, dogs,

    and cats.




  ? On May 10, 2022, Hamsa Biopharma India Pvt. Ltd. ("Hamsa Biopharma"), a

subsidiary directly owned by the Company, completed the outstanding items in

agreement concluded with the Jawaharlal Nehru Center for Advanced Scientific

Search (“JNCASR”). The agreement was signed on March 28, 2022exclusively

worldwide rights corresponding to certain molecules, technologies, patents and

    patent filings as discussed herein.




Strategy



The Life Sciences segment strategy includes:




        1. Subject to FDA approval, developing IGC-AD1 as a drug for treating
           agitation in dementia due to Alzheimer's and investigating and
           developing TGR 63 for the potential treatment of Alzheimer's disease.




  2. Marketing HoliefTM, Sunday SeltzerTM, and white label services.




We believe developing a drug for either symptoms or as a disease modifying agent
has considerable risk due to the need for multi-year trials and FDA approval.
However, there is considerable upside and significant value creation to the
extent we obtain first-to-market advantage, of which there can be no assurance.
If we were to obtain first-to-market advantage, such advantage could result in
significant growth if and when an approved drug launches. Our HoliefTM strategy
includes expanding the line of products and developing online services that
connect women with healthcare professionals who can help with PMS and
dysmenorrhea. Building an online community that brings women together can create
brand equity and loyalty.




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We believe that additional investment in clinical trials, R&D, facilities,
marketing, advertising, and acquisition of complementary products and businesses
will be critical to ongoing growth of the Life Sciences segment. 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. While
there can be no assurance, we believe this strategy can improve our existing
products and lead to the creation of new hemp-based products that can provide
treatment options for multiple conditions, symptoms, and side effects.



Our Infrastructure segment strategy includes winning and executing competitively
bid construction contracts, such as building roads, bridges, and other civil
works in Kerala, India.



COVID-19 Update



Our infrastructure business is based in the state of Kerala, India, which is
among the Indian states most affected by COVID-19, and Hong Kong with strict
quarantine and travel restrictions. The restrictions continue to adversely
impact our infrastructure business, financial condition, liquidity, and
operations. While IGC remains committed to its Infrastructure business line and
intends to continue pursuing the execution of construction contracts, the
purchase and resale of physical commodities used in infrastructure, and the
rental of heavy construction equipment as the pandemic allows, we have limited
visibility into when economic conditions will recover in India and Hong Kong.



In response, we shifted our current focus to a) human trials of IGC-AD1 and getting an Alzheimer’s disease drug through trials and to market, subject to approval from the FDA; and b) launching a line of cannabinoid-based women’s wellness products designed to help manage PMS and dysmenorrhea.

Results of operations for the three months ended

June 30, 2022and June 30, 2021




The historical results presented below are not necessarily indicative of the
results that may be expected for any future period. The following table presents
an overview of our results of operations for the three months ended June 30,
2022, and June 30, 2021:


Income statement (in thousands, unaudited)



                                                   Three months ended June 30,
                                                    2022                 2021            Change        Percent
                                                    ($)                  ($)              ($)           Change
Revenue                                                   212                   77            135            175 %
Cost of revenue                                           (70 )                (51 )          (19 )           37 %
Gross profit                                              142                   26            116            446 %
Selling, general and administrative expenses           (1,550 )             (1,776 )          226            (13 )%
Research and development expenses                      (1,394 )               (444 )         (950 )          214 %
Operating loss                                         (2,802 )             (2,194 )         (608 )           28 %
Impairment of investment                                    -                  (37 )           37           (100 )%
Other income, net                                          17                  443           (426 )          (96 )%
Loss before income taxes                               (2,785 )             (1,788 )         (997 )           56 %
Income tax expense/benefit                                  -                    -              -              -
Net loss                                               (2,785 )             (1,788 )         (997 )           56 %




Revenue - Revenue in the three months ended June 30, 2022, and June 30, 2021,
was primarily derived from our Life Sciences segment, which involved sales of
products such as lotion, gummies, and alcohol-based hand sanitizers, among
others. Revenue was approximately $212 thousand and $77 thousand for the three
months ended June 30, 2022, and June 30, 2021, respectively. The Infrastructure
segment had lower revenue during the three months ended June 30, 2022 due to the
slower recovery from the COVID-19 pandemic, the ensuing disruption, and the
onset of the monsoon season in India, which hampers construction activity. We
anticipate lower revenue from the Infrastructure segment for the foreseeable
future.




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Cost of revenue - Cost of revenue amounted to approximately $70 thousand for the
three months ended June 30, 2022, compared to $51 thousand in the three months
ended June 30, 2021. The cost of revenue in the three months ended June 30,
2022, is primarily attributable to raw materials that are required to produce
our products. Our gross margin increased from 34% to 67%, which reflects our
increased sales from higher-margin Life Sciences segment as opposed to the lower
margin infrastructure segment, which has traditionally been a lower margin
business.



Selling, general and administrative expenses ("SG&A") - SG&A expenses consist
primarily of employee-related expenses, sales commission, professional fees,
legal fees, marketing, other corporate expenses, allocated general overhead and
provisions, depreciation and write-offs relating to doubtful accounts and
advances, if any. SG&A expenses decreased by approximately $226 thousand or 13%
to approximately $1.5 million for the three months ended June 30, 2022, from
approximately $1.8 million for the three months ended June 30, 2021. The
decrease is from decreased marketing and legal expenses.



Research and Development expenses - R&D expenses were attributed to our Life
Sciences segment. The R&D expenses increased by approximately $950 thousand or
214% to $1.4 million during the three months ended June 30, 2022, from
approximately $444 thousand during three month ended June 30, 2021. The increase
is primarily attributable to the progression of Phase 2 trials on IGC-AD1 and
pre-clinical studies on TGR-63. We anticipate additional increases to R&D
expenses as the Phase 2 trial commences with patient sign ups.


Impairment of investment - During the three month ended June 30, 2022, there was
no impairment of investment. During the three month ended June 30, 2021, the
Company decided to dispose of its holding in and exit the acquisition of Evolve
I. As a result, Company impaired the investment of $37 thousand in the three
months ended June 30, 2021.



Other income, net - Other net income decreased by approximately $426 thousand or
96% during the three months ended June 30, 2022. The total other income for the
three months ended June 30, 2022, and 2021, is approximately $17 thousand and
$443 thousand, respectively. During the three months ended June 30, 2021, the
other income included one time income of approximately $430 thousand related to
forgiveness of PPP Note. Other income includes interest income and rental
income, dividend income, and unrealized gains from marketable securities, net,
and income from sale of scrap, among others.



Cash and capital resources




Our sources of liquidity are cash and cash equivalents, funds raised through the
ATM offering, cash flows from operations, short-term and long-term borrowings,
and short-term liquidity arrangements. The Company continues to evaluate various
financing sources and options to raise working capital to help fund current
research and development programs and operations. The Company does not have any
material long-term debt, capital lease obligations or other long-term
liabilities, except as disclosed in this report. Please refer to Note 12,
"Commitments and contingencies", Note 11, "Loans and Other Liabilities" and Note
9, "Leases" in Item 1 of this report for further information on Company
commitments and contractual obligations.



While the Company believes its existing balances of cash, cash equivalents and
marketable securities, and other short-term liquidity arrangements will be
sufficient to satisfy its working capital needs, capital asset purchases, debt
repayments, investments, including but not limited to, mutual funds, treasury
bonds, cryptocurrencies, and other asset classes, clinical trials and other
liquidity requirements, if any, associated with its existing operations over the
next 12 months, it will raise money as and when it is able to do so. The Company
continues to utilize the ATM to raise capital. Management is actively monitoring
the impact of COVID-19 on the Company's financial condition, liquidity,
operations, suppliers, industry, legal expenses, and workforce.



Please refer to Item 1A. "Risk Factors" for further information on the risks
related to the Company.



                                                 (in thousands, unaudited)

                                               As of                 As of
                                           June 30, 2022         March 31, 2022
                                                ($)                   ($)             Change        Percent Change
Cash and cash equivalents                           8,053                 10,460        (2,407 )                (23 )%
Working capital                                    11,068                 12,670        (1,602 )                (13 )%





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Cash and cash equivalents


Cash and cash equivalents decreased by approximately $2.4 million at $8 million
within three months June 30, 2022of $10.4 million of the March 31, 2022a decrease of around 23%.

The largest decrease is due to approximately $158,000 in the purchase of property, plant and equipment and the acquisition of intangible assets and approximately $2.2 million net cash loss.




Summary of Cash flows



                                               (in thousands, unaudited)

                                              Three months ended June 30,
                                               2022                2021           Change        Percent Change
Cash used in operating activities                 (2,196 )            (1,851 )        (345 )                 19 %
Cash used in investing activities                   (158 )               (95 )         (62 )                 65 %
Cash (used in)/provided by financing
activities                                            (1 )               726          (727 )               (100 )%
Effects of exchange rate changes on cash
and cash equivalents                                 (52 )                (9 )         (44 )                505 %
Net decrease in cash and cash
equivalents                                       (2,407 )            (1,229 )      (1,178 )                 96 %
Cash and cash equivalents at the
beginning of period                               10,460              14,548        (4,088 )                (28 )%
Cash and cash equivalents at the end of
the period                                         8,053              13,319        (5,266 )                (40 )%




Operating Activities



Net cash used in operating activities for the three months ended June 30, 2022,
was approximately $2.2 million. It consists of a net loss of approximately $2.8
million, a positive impact on cash due to non-cash expenses of approximately
$1.4 million, and a negative changes in operating assets and liabilities of
approximately $793 thousand. Non-cash expenses consist of an
amortization/depreciation charge of approximately $162 thousand and stock-based
expenses of approximately $1.2 million. In addition, changes in operating assets
and liabilities had a negative impact of approximately $793 thousand on cash, of
which approximately $258 thousand is due to decrease in accrued and other
liabilities and approximately $524 thousand decrease in accounts payable.



Net cash used in operating activities for the three months ended June 30, 2021,
was approximately $1.9 million. It consists of a net loss of approximately $1.8
million, a negative impact on cash due to non-cash expenses of approximately
$110 thousand, and changes in operating assets and liabilities of approximately
$48 thousand. Non-cash expenses consist of an amortization/depreciation charge
of approximately $157 thousand, stock-based expenses of approximately $125
thousand, and a gain due to forgiveness of PPP Note of $430 thousand. In
addition, changes in operating assets and liabilities had a positive impact of
approximately $48 thousand on cash, of which approximately $46 thousand is due
to decrease in accrued and other liabilities and operating lease assets.



Investing Activities



Net cash used in investing activities for the three months ended June 30, 2022,
was approximately $158 thousand, which comprised of expenses of approximately
$31 thousand for the acquisition and filing expenses related to patents and
purchase of property, plant, and equipment of approximately $127 thousand.



Net cash used in investing activities for the three months ended June 30, 2021,
was approximately $95 thousand, which comprised of expenses of approximately $2
thousand for the acquisition and filing expenses related to patents and purchase
of property, plant, and equipment of approximately $93 thousand.



Financing Activities


Net cash used in financing activities was approximately $1,000 for the three months ended June 30, 2022which includes repayment of the loan.




Net cash provided by financing activities was approximately $726 thousand for
the three months ended June 30, 2021, which is comprised of net proceeds from
issuance of equity stock through ATM offering, net of all expenses related to
issuance of stock.




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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 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, inventory, accounts receivable, foreign
currency translation, impairment of long-lived assets and investments,
stock-based compensation, and cybersecurity. We have a cybersecurity policy in
place and have taken cybersecurity measures that, although there can be no
assurance, we expect are likely to safeguard the Company against breaches. There
were no impactful breaches in cybersecurity during the three months ended June
30, 2022.



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 2021 Form 10-K, as well as Item 7 - Management's Discussion
and Analysis of Financial Condition and Results of Operations in the 2021 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 which may be applicable to us are
described in Note 2, "Significant Accounting Policies" to the Notes to the
Unaudited Condensed Consolidated Financial Statements in this report and in the
Notes to the Audited Consolidated Financial Statements in Part II of our 2022
Form 10-K.




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