IGC Pharma, Inc. (India Globalization Capital, Inc.) — Form 10-Q Summary
Reporting period: Fiscal quarter and six months ended September 30, 2017 (fiscal year ending March 31, 2018). The filing identifies the registrant as India Globalization Capital, Inc. (IGC). Its business included cannabis-based therapy development, heavy-equipment rental and construction management in India, and real-estate management in Malaysia.
Financial results and position
| Metric | Three months ended Sept. 30, 2017 | Six months ended Sept. 30, 2017 |
|---|---|---|
| Revenue | $235,648, versus $162,163 | $288,573, versus $237,563 |
| Operating loss | $263,012, versus $549,633 | $601,747, versus $933,177 |
| Net loss attributable to common stockholders | $303,804, versus $583,871 | $678,411, versus $998,040 |
| Loss per share | $0.01, versus $0.02 | $0.02, versus $0.04 |
- Margins: Gross margin, calculated from reported revenue less cost of revenue excluding depreciation, was approximately 30.8% for the quarter and 41.1% for the six months, compared with 44.2% and 34.9%, respectively, in 2016.
- Cash flow: Six-month operating cash use was $627,513 (prior year: $676,728); investing cash use was $148,112 (prior year: $155,347). Financing provided $844,931, mainly from equity issuance. Cash increased by $58,997 to $597,026.
- Liquidity: Current assets were $2.02 million and current liabilities $1.22 million, yielding reported working capital of $803,769. Short-term investments fell from $1.88 million at March 31 to zero at September 30.
- Debt and obligations: Non-current liabilities totaled $2.55 million, including $1.8 million of notes payable, $399,726 of other loans and $350,794 of long-term borrowings. The company reported $3.77 million in total liabilities.
- Balance sheet: Total assets were $9.99 million and stockholders’ equity was $6.22 million at September 30, versus $11.28 million and $7.35 million at March 31.
Changes and management commentary
- Quarterly revenue increased about 45% year over year; six-month revenue increased about 21%. Management attributed the increase to steel trading, real-estate management and equipment rental.
- Operating and net losses narrowed year over year. Management cited much lower depreciation following the curtailment of the China iron-ore mining business; quarterly depreciation was $4,344 versus $97,842, and six-month depreciation was $10,309 versus $195,514.
- Six-month SG&A increased to $709,960 from $636,802, largely reflecting public-company costs, including legal fees. Management said most interest expense was paid in common shares and was non-cash.
- Revenue for the six months came from rental, trading and real estate: 81% from India and 19% from Malaysia. The filing reports no revenue from its cannabis product candidates.
Outlook, risks and unusual items
- Management said it expects to raise money to advance its patent portfolio and testing and to begin marketing and licensing its Alzheimer’s product. No quantified revenue, earnings or cash-flow guidance was provided.
- IGC described four lead cannabis-related product candidates and patent filings, but patent approval and successful development are not assured. The company’s stated near-term aim was medical trials; its longer-term plans included marketing through partnerships or joint ventures.
- A $427,721 receivable from Cochin International Airport was over one year old. The company said arbitration ruled in its favor and retained the full balance without impairment; collection remains a key item to monitor.
- A $375,191 advance for land was subject to ongoing settlement negotiations involving a purchase or sale of land and possible refund.
- The $1.8 million Bricoleur Partners note is described as extended only to July 31, 2016, while still outstanding at September 30, 2017. Interest was paid in shares; the company issued 90,000 shares during the quarter. The filing does not clearly explain a further maturity extension.
- The company issued 1,012,252 shares under its at-the-market program during the quarter, valued at $367,931. Cash-flow disclosures also show $1.016 million from equity issuance during the six months.
- Management reported no significant contingencies or commitments for the quarter, no material legal proceedings, no material changes to previously disclosed risk factors, and effective disclosure controls.
Important facts for investors to verify
- How much additional capital will be required, on what terms, and what dilution may result from further equity issuance?
- Whether the Bricoleur note’s maturity was extended beyond July 31, 2016, and the current status of its principal and share-based interest arrangements.
- Timing and collectability of the aged $427,721 airport receivable, and the outcome of negotiations concerning the $375,191 land advance.
- Progress, funding needs and regulatory/patent milestones for the four product candidates; the filing provides no clinical results or quantified commercialization outlook.
- Share-count disclosures differ: the cover reports approximately 28,065,272 shares outstanding as of November 13, 2017, while the balance sheet and note report 28,005,272 as of September 30. Confirm the share count and related dilution.