Business context and reporting period
India Globalization Capital, Inc. (ticker: IGC; the filing’s registrant name) filed this unaudited Form 10-Q for the quarter and nine months ended December 31, 2021, its fiscal third quarter. The company operates Infrastructure and Life Sciences businesses. Financial amounts below are in U.S. dollars, in thousands, unless stated otherwise.
Financial performance and position
| Metric | Three months ended Dec. 31, 2021 | Three months ended Dec. 31, 2020 | Nine months ended Dec. 31, 2021 | Nine months ended Dec. 31, 2020 |
|---|---|---|---|---|
| Revenue | $142 | $108 | $275 | $817 |
| Gross profit / gross margin | $62 / 43.7% | $14 / 13.0% | $126 / 45.8% | $86 / 10.5% |
| Operating loss | $(2,385) | $(2,326) | $(8,927) | $(5,933) |
| Net loss | $(2,381) | $(2,323) | $(8,513) | $(5,862) |
| Basic and diluted loss per share | $(0.05) | $(0.06) | $(0.18) | $(0.14) |
For the nine months, net cash used in operating activities was $6,575; investing activities used $189; and financing activities provided $4,143, principally from the ATM share offering. Cash declined $2,607 to $11,941. Working capital was $17,958 at December 31, 2021, versus $21,149 at March 31, 2021.
At December 31, 2021, total assets were $31,288, total liabilities $1,813, and stockholders’ equity $29,475. Loans totaled about $148 ($3 short-term and $145 long-term); operating lease liabilities were $494. The filing reports no material long-term debt beyond disclosed loans, leases, and other obligations.
Material changes versus comparable periods
- Quarterly revenue rose 31% year over year, but nine-month revenue fell 66% to $275. Life Sciences revenue was $249 for the nine months, down from $698; Infrastructure revenue was $26, down from $119.
- Nine-month operating loss widened by $2,994 to $8,927. SG&A increased $2,532 to $7,956, including a $1.7 million provision related to inventory reported stolen while held by a vendor, higher investor-relations expense, an IRS tax penalty, and higher stock compensation and depreciation.
- Nine-month R&D increased 84% to $1,097, reflecting Alzheimer’s clinical-trial and product research costs. Cost of revenue fell to $149 from $731 as revenue declined.
- Other income was $451 for the nine months, including $430 from forgiveness of the PPP loan. A $37 investment impairment also was recorded.
- The company raised $4,145 net through its ATM program by selling 1.75 million shares during the nine months. Shares outstanding increased from 47.8 million at March 31, 2021, to 51.1 million at December 31, 2021.
Outlook, management commentary, risks, and unusual items
No quantified revenue or earnings guidance is provided. Management said it believes existing cash and other liquidity sources will cover working capital and other needs for the next 12 months, while also stating that it continues to use the ATM and evaluate financing. Management expects R&D spending to increase as IGC-AD1 trials progress, subject to FDA approval and adequate funding.
The company completed IGC-AD1 Phase 1 dose-escalation studies and submitted the clinical/statistical report to the FDA. The filing describes a small trial and reports no serious or life-threatening adverse events or deaths; one mild dizziness event was considered related to the drug. Reported changes in neuropsychiatric inventory scores are exploratory trial results, not evidence of established efficacy or FDA approval. The company intends to pursue further trials, including for agitation associated with Alzheimer’s dementia, subject to regulatory approval.
Management cited COVID-19 restrictions in India and Hong Kong as continuing to disrupt infrastructure operations, revenue, liquidity, and visibility. Other disclosed risks include uncertain clinical outcomes and regulatory approval, commercialization and intellectual-property risks, and potential future funding needs. The $1.7 million vendor-held inventory loss is being pursued for recovery from the vendor; the filing does not indicate that recovery is assured.
Two consolidated shareholder lawsuits were subject to a proposed $1 million settlement requiring court approval; the company recorded a $153 thousand provision, with the insurer expected to pay the balance. A final approval hearing was scheduled for April 13, 2022. Separately, Apogee litigation remained pending, with a motion to dismiss unresolved. Management concluded disclosure controls were effective as of period end.
Important facts for investors to verify
- Whether the proposed shareholder settlement received final court approval and the final company cost.
- Any recovery, insurance proceeds, or further losses relating to the $1.7 million vendor-held inventory reported stolen.
- Subsequent FDA decisions, trial design, funding, and results for IGC-AD1; the Phase 1 findings are preliminary and based on a small cohort.
- Cash burn, ATM issuance and dilution, and whether liquidity remains adequate as clinical and operating costs continue.
- Whether COVID-19 disruptions ease enough for infrastructure revenue and Life Sciences sales to stabilize.