See accompanying Notes to the Condensed Consolidated Financial Statements in this report.
See accompanying Notes to the Condensed Consolidated Financial Statements in this report.
See accompanying Notes to the Condensed Consolidated Financial Statements in this report.
NOTES
TO
CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
THREE
AND SIX
MONTHS ENDED
SEPTEMBER 30
, 2018
(Unaudited)
Unless the context requires otherwise, all references in this report to “IGC,” “the Company”, “we,” “our” and “us” refer to India Globalization Capital, Inc., together with our subsidiaries. Our filings are available on www.sec.gov. The information contained on our website, www.igcinc.us, is not incorporated by reference in this report, and you should not consider it a part of this report.
NOTE 1 – BUSINESS DESCRIPTION
Business
IGC Management’s focus is to develop and commercialize cannabinoid based alternative therapies for indications such as Alzheimer’s disease, Parkinson’s disease, and pain. Our flagship product Hyalolex
tm
, is not a U.S. Food and Drug Administration (“FDA”) approved pharmaceutical product. It is a cannabinoid based alternative oral combination therapy whose active ingredients have been shown to help alleviate symptoms associated with Alzheimer’s disease. The commercialization of Hyalolex
tm
has commenced and we expect revenue in fiscal year 2019, though there can be no assurance as to the amount of such revenue. The Company recently entered the hemp oil / cannabidiol (CBD) infused beverage space and expects to bring a sugar free CBD infused energy drink to market. The Company has filed several patents for its pipeline of products including ones for the treatment of Alzheimer’s, Parkinson’s and Central Nervous System related disorders, pain, eating disorders, seizures in cats and dogs, and an energy drink. In addition, since inception, the Company operates a legacy business that involves trading commodities and heavy equipment rental. Our revenue currently comes from our legacy business.
Business Organization
IGC is a Maryland corporation formed in April 2005. Our principal place of business is located at 4336 Montgomery Avenue, Bethesda, Maryland 20814. Operationally, our U.S. East Coast based staff works from our corporate office in Potomac, Maryland or nearby virtual offices. We also maintain offices in the State of Washington for our West Coast based staff. Our telephone number is +1 (301) 983-0998.
Our commodity trading, equipment rental, and accounting headquarters are located in Kochi, Kerala, India, housing the majority of our India based staff. In addition, we have employees in Delhi, Nagpur and Chennai, India.
We maintain corporate and product websites at http://www.igcinc.us, http://www.igcpharma.com and http://www.hyalolex.com. The contents of our websites and the downloadable files found therein are not incorporated by reference.
As of September 30, 2018, the Company has operational subsidiaries located in India and Hong Kong. The Company’s filings are available on www.sec.gov.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies adopted by the Company, for these consolidated financial statements, are set out in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018, filed with the U.S. Securities and Exchange Commission (“SEC”) on June 21, 2018 (the “2018 10-K”), specifically as Note 2 to the consolidated financial statements. These condensed Interim Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and respective notes contained in the Company’s 2018 10-K. The following is a summary of our significant accounting policies.
| Q2 2019 Form 10-Q
Basis of presentation and use of estimates
The Company has prepared the accompanying unaudited Condensed Consolidated Financial Statements (“Financial Statements”) in accordance with the rules and regulations of the SEC for interim financial information. Accordingly, certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been omitted in accordance with the SEC’s rules and regulations for interim reporting.
In preparing the financial statements management is required to make estimates and assumptions that could affect the amounts reported in these condensed consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates.
The Company’s current fiscal year ends on March 31, 2019. This interim financial information and results contained in this Form 10-Q do not necessarily represent or indicate what the operating results will be for any other interim period or for the fiscal year ending March 31, 2019.
In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation have been included in the Financial Statements.
Presentation and functional currencies
The consolidated financial statements include the accounts of the Company and all its subsidiaries that are more than 50% owned and controlled. The Company consolidates the subsidiaries into its consolidated financial statements. Transactions between the Company and its subsidiaries have been eliminated in the consolidated financial statements. We exclude our investments and minority non-controlling interests, and any information provided by them is not incorporated by reference in this report, and you should not consider it a part of this report.
The reporting currency of the Company is U.S. Dollar (USD). The Company’s subsidiaries have US Dollar, Indian Rupee (INR), and Hong Kong dollar (HKD) as functional currencies. Changes in functional currency amounts that result from the measurement of foreign currency transactions into the functional currency are included in net income.
Changes in reporting currency arising from translating a foreign subsidiary’s functional currency financial statements in the reporting currency are included in the other comprehensive income, a separate component of shareholders’ equity. The translation of the functional currencies into U.S. dollars is performed for assets and liabilities using the exchange rates in effect at the balance sheet date and for revenues, costs and expenses using average exchange rates prevailing during the reporting periods.
Recent Accounting Pronouncements
Adopted
Revenue Recognition
On January 1, 2018, the Company adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers and all the related amendments, which are also codified into Accounting Standards Codification (ASC) 606. The Company elected to adopt this guidance using the modified retrospective method. The adoption of this standard did not have a material impact on the Company’s financial position or results of operations. The Company did not restate prior period information for the effects of the new standard, nor did the Company adjust the opening balance of its’ retained deficit to account for the implementation of the new requirements of this standard. The Company does not expect the adoption of this guidance to have a material effect on its results of operations in future periods.
In January 2016, the FASB issued ASU 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which provides guidance for the recognition, measurement, presentation, and disclosure of financial assets and liabilities. This ASU became effective for the Company beginning in the first quarter of fiscal year 2019. Based on the composition of the Company’s investment portfolio, the adoption of ASU 2016-01 is not expected to have a material impact on its consolidated financial statements.
| Q2 2019 Form 10-Q
Not yet adopted
In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, “Leases (Topic 842)”. Under this guidance, an entity is required to recognize right-of-use assets and lease liabilities on its balance sheet and disclose key information about leasing arrangements. This guidance offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This guidance is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, and requires a modified retrospective adoption, with early adoption permitted. The Company does not expect the adoption to have a material impact on its consolidated financial statements upon adoption.
In June 2016, the FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial instruments." The amendments in this update change how companies measure and recognize credit impairment for many financial assets. The new expected credit loss model will require companies to immediately recognize an estimate of credit losses expected to occur over the remaining life of the financial assets (including trade receivables) that are in the scope of the update. The update also made amendments to the current impairment model for held-to-maturity and available-for-sale debt securities and certain guarantees. The guidance will become effective for us on January 1, 2020. Early adoption is permitted for periods beginning on or after January 1, 2019. Based on the composition of the Company’s investment portfolio, current market conditions, and historical credit loss activity, the adoption of ASU 2016-13 is not expected to have a material impact on its consolidated financial statements.
In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, and ASU No. 2017-04, Intangibles- Goodwill and Other (Topic 350) - Simplifying the Test for Goodwill Impairment. ASU No. 2017-01 clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The definition of a business affects many areas of accounting including acquisitions, disposals, goodwill, and consolidation. The guidance is effective for annual periods beginning after December 15, 2017, including interim periods within those periods. ASU No. 2017-04 eliminates Step 2 of the goodwill impairment test and requires a goodwill impairment to be measured as the amount by which a reporting unit’s carrying amount exceeds its fair value, not to exceed the carrying amount of its goodwill. The ASU is effective for annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.
In February 2018, the FASB issued ASU No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220). ASU 2018-02 addresses the effect of the change in the U.S. federal corporate tax rate on items within accumulated other comprehensive income or loss due to the enactment of the Tax Act on December 22, 2017. The new standard is effective for annual periods, and for interim periods within those annual periods, beginning after December 15, 2018, with early adoption permitted. We do not believe the adoption of this guidance will have a material impact on our consolidated financial statements.
NOTE
3
– ACCOUNTS RECEIVABLE
Accounts receivable, net of allowances, amounted to about $162 thousand and about $558 thousand as of September 30, 2018, and March 31, 2018, respectively. The accounts receivable net of reserves for the quarter ended September 30, 2018 stems primarily from commodity trading and the rental of heavy construction equipment.
NOTE
4
– INVENTORY
|
|
(in thousands)
|
|
|
|
As of
September 30
, 2018
|
|
|
As of
March 31, 2018
|
|
Work In Progress
|
|
$
|
650
|
|
|
$
|
486
|
|
Total
|
|
$
|
650
|
|
|
$
|
486
|
|
The Company’s policy, consistent with ASC 330, is to book the cost of producing components and completed products as inventory. The products and/or its components will either be sold, or used for educational and marketing demonstrations, over the next twenty-four months. Management evaluates its policy on inventory periodically.
| Q2 2019 Form 10-Q
NOTE
5
– INVESTMENT HELD FOR SALE
Our wholly-owned Malaysian-based subsidiary, Cabaran Ultima operates a real estate management business. Our board decided to exit this business and as of March 31, 2018, we accounted for our investment in Cabaran Ultima as “Investment Held for Sale” valued at $147,500. We expect to dispose of Cabaran Ultima in the fiscal year ending March 31, 2019.
NOTE
6
– INVESTMENT
Investment for each of the periods ended September 30, 2018, and March 31, 2018, consists of the following:
|
|
(in thousands)
|
|
|
|
As of
September
30, 2018
|
|
|
As of
March 31, 2018
|
|
Investment in equity shares of unlisted company (i)
|
|
$
|
21
|
|
|
$
|
26
|
|
Investment in affiliates (ii)
|
|
|
773
|
|
|
|
773
|
|
Total
|
|
$
|
794
|
|
|
$
|
799
|
|
(i)
|
The movement between the two reporting periods is based on the sale at fair value of 3% of the investment in the amount of $2,261 to a director of our subsidiary and fluctuations in the exchange rate. The investment is recorded at cost.
|
(ii)
|
This amount represents our investment in Midtown Partners & Co., LLC (“MTP). The investment is recorded at cost. We do not have any influence over the operations of MTP. Please see Note 11 - Related Party Transactions for more information on MTP.
|
The Company regularly reviews its investment portfolio to determine if any security is other-than-temporarily impaired, which would require the Company to record an impairment charge in the period. We concluded that as at September 30, 2018, no impairment provision was required against the carrying value of the investments.
NOTE
7
– OTHER CURRENT AND NON-CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
|
|
(in thousands)
|
|
|
|
As of
September
30, 2018
|
|
|
As of
March 31, 2018
|
|
Advance to suppliers, others & services
|
|
$
|
101
|
|
|
$
|
299
|
|
Statutory advances
|
|
|
40
|
|
|
|
44
|
|
Deposit and other current assets
|
|
|
232
|
|
|
|
12
|
|
Total
|
|
$
|
373
|
|
|
$
|
355
|
|
Other non-current assets consist of the following:
|
|
(in thousands)
|
|
|
|
As of
September
30, 2018
|
|
|
As of
March 31, 2018
|
|
Non-current deposits
|
|
$
|
16
|
|
|
$
|
18
|
|
Claims receivable (1)
|
|
|
385
|
|
|
|
-
|
|
Other advances
|
|
|
418
|
|
|
|
466
|
|
Total
|
|
$
|
819
|
|
|
$
|
484
|
|
(1)
|
The claims receivables are due from the Cochin International Airport. Cochin International Airport is partially owned by the State Government of Kerala. The receivables have been due for periods in excess of one year as of September 30, 2018. The Company continues to carry the full value of the receivables without interest and without any impairment, because it believes that there is minimal risk that this organization will become insolvent and unable to make payment.
|
| Q2 2019 Form 10-Q
NOTE
8
– INTANGIBLE ASSETS
The movement in intangible assets is given below.
|
|
(in thousands)
|
|
|
|
As of
September
30, 2018
|
|
|
As of
March 31, 2018
|
|
Patent & Other Intangible Assets at the beginning of the period
|
|
$
|
128
|
|
|
$
|
-
|
|
Patent acquisition and filing expenses
|
|
|
46
|
|
|
|
128
|
|
Acquisition of Right of Distribution and Technology(ii)
|
|
|
1,347
|
|
|
|
-
|
|
Total
|
|
$
|
1,521
|
|
|
$
|
128
|
|
(i)
|
The value of intangibles includes the acquisition of patent rights, data, and the filing of patents. The amortization of acquired patent rights is 15 years.
|
(ii)
|
On September 25, 2018, IGC executed a Strategic Distributor and Partnership Agreement for products, including a sugar free, energy drink called ‘Nitro G,’ in exchange for 797 thousand restricted, unregistered common stock. The Fair Market Value (FMV) of the restricted shares was mutually agreed by the parties to be about $1,347 thousand. This amortization period for this intangible asset is ten years, which is the initial period of the Agreement. The Company periodically evaluates its impairment policy.
|
NOTE
9
– PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consist of the following:
|
|
(in thousands, except useful life details)
|
|
Category
|
|
Useful Life (years)
|
|
|
As of
September 30
, 2018
|
|
|
As of
March 31, 2018
|
|
Land
|
|
|
N/A
|
|
|
$
|
4,645
|
|
|
$
|
5,175
|
|
Building & facilities
|
|
|
25
|
|
|
|
1,252
|
|
|
|
1,329
|
|
Plant and machinery
|
|
|
20
|
|
|
|
1,529
|
|
|
|
1,703
|
|
Computer equipment
|
|
|
3
|
|
|
|
162
|
|
|
|
159
|
|
Office equipment
|
|
|
5
|
|
|
|
114
|
|
|
|
115
|
|
Furniture and fixtures
|
|
|
5
|
|
|
|
64
|
|
|
|
65
|
|
Vehicles
|
|
|
5
|
|
|
|
290
|
|
|
|
292
|
|
Total
Gross Value
|
|
|
|
|
|
$
|
8,056
|
|
|
$
|
8,838
|
|
Less: Accumulated depreciation
|
|
|
|
|
|
$
|
(2,381
|
)
|
|
$
|
(2,601
|
)
|
Total Net PP&E
|
|
|
|
|
|
$
|
5,675
|
|
|
$
|
6,237
|
|
Depreciation expense in the quarter ended in September 30, 2018 and 2017, amounted to $14.4 thousand and $4.3 thousand, respectively. For the six months ended September 30, 2018 and 2017, it amounted to $29 thousand and $10 thousand, respectively. Depreciation expense for the fiscal year ended March 31, 2018 was $19.4 thousand. The decrease in total net PP&E as well as the decrease in accumulated depreciation is primarily due to changes in the exchange rate between the Indian rupee and the US dollar for assets held by our foreign subsidiaries in India.
For more information, please refer to Note 23 – Segment Information for the long-term assets other than financial instruments held in the country of domicile and foreign countries.
| Q2 2019 Form 10-Q
NOTE
10
– OTHER CURRENT AND NON-CURRENT LIABILITIES
Other current liabilities consist of the following:
|
|
(in thousands)
|
|
|
|
As of
September
30, 2018
|
|
|
As of
March 31, 2018
|
|
Statutory payables
|
|
$
|
2
|
|
|
$
|
4
|
|
Employee related liabilities
|
|
|
204
|
|
|
|
204
|
|
Accrued expenses
|
|
|
453
|
|
|
|
286
|
|
Total
|
|
$
|
659
|
|
|
$
|
494
|
|
Employee related liabilities consists of salary payable to employees. Accrued expenses consist primarily of amounts payable against services related to audit, legal, marketing, etc., in the normal course of business.
Other non-current liabilities consist of the following:
|
|
(in thousands)
|
|
|
|
As of
September 30
, 2018
|
|
|
As of
March 31, 2018
|
|
Statutory reserve
|
|
$
|
14
|
|
|
$
|
15
|
|
Total
|
|
$
|
14
|
|
|
$
|
15
|
|
Statutory reserve is a gratuity reserve for employees in our subsidiaries in India.
NOTE 1
1
- RELATED PARTY TRANSACTIONS
We pay an affiliate of our CEO $4,500 per month for office space and certain general and administrative services rendered in Maryland. In addition, we pay another affiliate of our CEO $6,100 per month for office and facilities and services rendered in Washington State. We believe, based on rents and fees for similar services in the Washington, D.C. metropolitan area, and Washington State, that the fee charged by the affiliates are at least as favorable as we could have obtained from an unaffiliated third party and these payments are not considered, or meant to be, compensation to our CEO. The rental agreement for the Maryland location is on a month-to-month basis and may be terminated by our Board of Directors of the Company at any time without notice. The rental agreement for Washington State facilities expires on December 31, 2018, unless renewed by mutual consent. During the quarter ended September 30, 2018, the total rent paid to the affiliates were $13,500 for the office space (and administrative services) in Maryland, and $18,300 for the facilities in Washington State. As of September 30, 2018, the Company has a net unpaid balance of $112,575 in compensation to our CEO.
Loans by Related Parties:
We have a secured working capital loan from an affiliate of our CEO that had a loan balance of $107,500 as of September 30, 2018, and March 31, 2018, at an annual interest rate of zero percent, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Loans to Related Parties
On April 30, 2015, we loaned $70,000 in working capital to Apogee Financial Services for Midtown Partners, LLC. The loan is outstanding as of September 30, 2018.
| Q2 2019 Form 10-Q
NOTE 1
2
– NOTES PAYABLE
Since October 16, 2009, the Company has had a no-interest note with Bricoleur Partners, L.P. (‘Bricoleur’) in the amount of $1.8 million. The maturity date of the loan has been extended various times, and, as of September 30, 2018, Bricoleur’s position is that the loan is outstanding. From October 16, 2009, through March 31, 2018, the Company issued a total of approximately 1.9 million “penalty” shares, paid incrementally for every month that the loan has been outstanding, valued at approximately $2.7 million, based on the market value of the shares at each instance of issuance. According to the IRS rules these amounts are non-deductible for the Company. In November 2017, the Company asked the shareholders to vote for a resolution that allowed the Company to deliver up to an additional 2,000,000 shares of the Company to Bricoleur. After several adjournments to garner support from shareholders, this resolution failed to pass. Despite the categorization of the share issuances under the broad category of interest on past financial statements, the Company believes that these payments of shares constitute a repayment of debt, at least in substantial part. On May 2, 2018, the Company filed a lawsuit in the Circuit Court for Montgomery County, Maryland, seeking a declaratory judgment that the shares issued to Bricoleur by the Company represent payment on the loan and damages for improper lending practices under Maryland law. The lawsuit is currently pending.
NOTE 1
3
– SECURED LOANS - OTHER
The Company’s total cash interest expense for the quarters ended September 30, 2018, and 2017, was about $4,500 and about $9,932, respectively.
As of September 30, 2018, the Company had three secured loans categorized as Loans-Other from related parties totaling about $225,250 at an average annual interest rate of 10%:
Loan 1: We have a loan from an individual for $50,000, at an annual interest rate of 15%, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Loan 2: We have a loan for $67,750 from an affiliate of our CEO, at an annual interest rate of 15%, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
Loan 3: We have a working capital loan with a balance of $107,500 as of September 30, 2018, from an affiliate of our CEO, at an annual interest rate of zero percent, due February 23, 2022. There is no prepayment penalty. The assets of the Company secure the loan.
The Company repaid $202,250 in loans from related parties during the six-months ended September 30, 2018.
NOTE 1
4
– COMMITMENTS AND CONTINGENCY
The Company currently has no commitments or contingency, which are required to be reported.
NOTE 1
5
– COMMON STOCK
AND ADDITIONAL PAID UP CAPITAL
We have one security listed on the NYSE American: Common Stock, $.0001 par value (ticker symbol: IGC) (“Common Stock”). This security is also available for trading on the Frankfurt, Stuttgart, and Berlin stock exchanges (ticker symbol: IGS1). We have redeemable warrants listed on the OTC markets (ticker symbol: IGC.WT. CUSIP number 45408X118 expiring on March 6, 2019) to purchase Common Stock.
We have Units that are not listed consisting of one share of Common Stock and two redeemable warrants to purchase Common Stock. The Unit holders are requested to contact the Company to get their existing Units separated into Common Stock and Warrants. The Company’s outstanding warrants are exercisable and may be exercised by contacting IGC or the transfer agent, Continental Stock Transfer & Trust Company. The Company has a right to call the warrants, provided the Common Stock has traded at a closing price of at least $85.00 per share for any 20 trading days within a 30-trading day period ending on the third business day prior to the date on which notice of redemption is given. If the Company calls the warrants, either the holder will have to exercise the warrants by purchasing one share of Common Stock from the Company by surrendering 10 warrants and a payment of $50.00, or the warrants will expire. In accordance with the terms of the outstanding warrant agreement between the Company and its warrant holders, the Company in its sole discretion may lower the price of its warrants at any time prior to their expiration date.
| Q2 2019 Form 10-Q
As of September 30, 2018, the Company was authorized to issue up to 150,000,000 shares of common stock, par value $0.0001, and there were 91,772 Units and 34,247,769 Shares of Common Stock issued and outstanding. In addition, the Company has 11,671,578 outstanding Public Warrants to purchase 1,167,158 Shares of Common Stock by surrendering 10 warrants and a payment of $50.00 in exchange for each share. During the period ended September 30, 2018, the Company issued 120,000 shares pursuant to a marketing agreement and sold 3,900,000 shares pursuant to the At-the-Market Offering Agreement dated September 24, 2018, out of which 1,800,000 shares settled as of September 30, 2018.
As of September 30, 2018, the Company allocated, but not issued, 1,666,565 shares, stemming from two different agreements. In addition, 60,000 options were exercised by one of our advisors.
NOTE 1
6
– STOCK-BASED COMPENSATION
On April 1, 2009, the Company adopted ASC 718, “Compensation-Stock Compensation” (previously referred to as SFAS No. 123 (revised 2004),
Share Based Payment)
. ASC 718 requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. As of September 30, 2018, under the newly shareholder-approved 2018 Omnibus Incentive Plan, 262,228 shares of common stock have been awarded and issued.
Under the combined 2008 Omnibus Incentive Plan and the renewed 2018 Omnibus Incentive Plan, as of April 1, 2018, a total of 4,439,899 shares of common stock have been awarded and issued, and there are no shares of common stock available for future grants of options or stock awards. In addition, there are outstanding options granted to Advisors to purchase 910,000 common stock, expiring between October 31, 2022 and October 31, 2023, with a weighted average exercise price of $0.34 per share. The options are fair valued at $0.35 million using a Black-Scholes Pricing Model.
The amount recognized as stock-based compensation for the six-month period ended September 30, 2017, is immaterial and for the three-month and six-month periods ended September 30, 2018, is as follows:
|
|
(in thousands)
|
|
|
|
Three Months ended
September 30, 2018
|
|
|
Six months ended
September 30, 2018
|
|
Cost of sales
|
|
$
|
-
|
|
|
$
|
13
|
|
Selling, general and administrative (including research and development)
|
|
|
114
|
|
|
|
243
|
|
Total stock
compensation to employees
|
|
$
|
114
|
|
|
$
|
256
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
$
|
-
|
|
|
|
10
|
|
Selling, general and administrative (including research and development)
|
|
|
13
|
|
|
|
19
|
|
Intangible assets
|
|
|
30
|
|
|
|
30
|
|
Total options to advisors and
vendors
|
|
$
|
43
|
|
|
$
|
59
|
|
In the quarter ended September 30, 2018, the Company issued 1,025,000 shares. These shares were part of a special grant to employees and directors granted in the fiscal year ended March 31, 2017. The shares vested over a period of one year. The expense related to these shares is reflected in the quarter ended September 30, 2018. In the same period, the Company also granted 320,000 options to advisors. In the quarter, 60,000 options were exercised.
| Q2 2019 Form 10-Q
Summary of Options
|
|
Number of options
(in thousands)
|
|
Balance as of March 31 2018
|
|
$
|
650
|
|
Option Granted during the period
|
|
$
|
320
|
|
Option Exercise during the period
|
|
$
|
(60
|
)
|
Balance as of September 30 2018
|
|
$
|
910
|
|
NOTE 1
7
– FAIR VALUE OF FINANCIAL INSTRUMENTS
The fair value of the Company’s current assets and current liabilities approximate their carrying value because of their short-term nature. Such financial instruments are classified as current if they are expected to be liquidated within the next twelve months.
NOTE 1
8
– SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
During the three months ended September 30, 2018, and 2017, the Company recorded selling, general and administrative expenses of $873 thousand and $335 thousand. For the six months ended September 30, 2018, and 2017, SG&A amounted to $1,427 thousand and $721 thousand respectively. Selling, general and administrative expenses include expenses related to public company, employee related expenses, depreciation, and research and development.
During the three months ended September 30, 2018 and 2017, the Company recorded research and development expense of $237 thousand and $78 thousand, respectively. All research and development costs are expensed in the quarter in which they are incurred.
NOTE 19
– IMPAIRMENT
No impairment is recorded for the three or six-month periods ended September 30, 2018 and 2017.
NOTE 20
– OTHER LOSS - NET
Other loss for the three months ended September 30, 2018 and 2017, amounted to $3 thousand and $41 thousand, respectively. For the six months ended September 30, 2018 and 2017, other loss amounted to $4 thousand and $77 thousand, respectively. Such amounts include income received from the supply of skilled operators for the heavy equipment rental business and from miscellaneous rental income.
NOTE 21
–
INTENTIONALLY
LEFT BLANK
NOTE 22 – RECONCILIATION OF EPS
In accordance with ASC Topic 280 – "Earnings Per Share", the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common stock outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional shares of common stock that would have been outstanding if the potential common stock had been issued and if the additional shares of common stock were dilutive. Potential common stock consists of the incremental common stock issuable upon the exercise of common stock options and warrants (using the if-converted method). The computation of basic loss per share for the period ended September 30, 2018, excludes potentially dilutive securities of 2.3 million shares underlying share purchase options, unvested shares granted to employees, and warrants, as well as 27,532 shares from the conversion of outstanding units, because their inclusion would be antidilutive.
The weighted average number of shares outstanding as of September 30, 2018 and 2017, used for the computation of basic earnings per share (“EPS”) is 31,344,648 and 27,355,826, respectively. Due to the loss incurred during the three and six-month periods ended September 30, 2018, and 2017, all of the potential equity shares are anti-dilutive and accordingly, the fully diluted EPS is equal to the basic EPS.
| Q2 2019 Form 10-Q
NOTE 23 – SEGMENT INFORMATION
Accounting pronouncements establish standards for the manner in which public companies report information about operating segments in annual and interim financial statements. Operating segments are components of an enterprise that have distinct financial information available and evaluated regularly by the chief operating decision-maker ("CODM") to decide how to allocate resources and evaluate performance. The Company's CODM is considered to be the Company's chief executive officer ("CEO"). The CEO reviews financial information presented on an entity level basis for purposes of making operating decisions and assessing financial performance. Therefore, and before our alternative therapies business started, the Company had determined that it operated in a single operating and reportable segment. As of the date of this report and in preparation for the new and different source of revenue, the Company has determined that it operates in two operating and reportable segments: Alternative Therapies and Legacy Business.
The following provides information required by ASC 280-10-50-38 Entity-wide Information:
1) The table below shows revenue reported by product and service:
Product & Service
|
|
(in thousands)
|
|
|
|
|
Revenue by Segment
|
|
Six months
Ended
September 30
, 2018
|
|
|
Percentage of
Total Revenue
|
|
Legacy infrastructure
|
|
$
|
2,289
|
|
|
|
100
|
%
|
Alternative therapies
|
|
|
-
|
|
|
|
-
|
%
|
Total
|
|
$
|
2,289
|
|
|
|
100
|
%
|
2(a) The table below shows the revenue attributed to the country of domicile (U.S.) and foreign countries. Revenue is attributed to an individual country if the invoice made to the customer originates in that country. The basis for originating an invoice is the underlining agreement.
|
|
|
|
|
(in thousands)
|
|
|
|
|
Segments
|
|
Country
|
|
|
Six months Ended
September 30, 2018
|
|
|
Percentage of
Total Revenue
|
|
Asia
|
|
India
|
|
|
$
|
59
|
|
|
|
3
|
%
|
|
|
Hong Kong
|
|
|
|
2,230
|
|
|
|
97
|
%
|
North America
|
|
U.S.
|
|
|
|
-
|
|
|
|
-
|
%
|
Total
|
|
|
|
|
$
|
2,289
|
|
|
|
100
|
%
|
2(b) The table below shows the long-term assets other than financial instruments held in the country of domicile and foreign countries.
|
|
(in thousands)
|
|
Nature of Assets
|
|
U.S.
(Country of Domicile)
|
|
|
Foreign Countries (India)
|
|
|
Total
|
|
Intangible assets
|
|
$
|
1,521
|
|
|
$
|
-
|
|
|
$
|
1,521
|
|
Property, plant and equipment, net
|
|
|
976
|
|
|
|
4,699
|
|
|
|
5,675
|
|
Investments
|
|
|
773
|
|
|
|
21
|
|
|
|
794
|
|
Other non-current assets
|
|
|
-
|
|
|
|
819
|
|
|
|
819
|
|
Total long-term assets
|
|
$
|
3,270
|
|
|
$
|
5,539
|
|
|
$
|
8,809
|
|
| Q2 2019 Form 10-Q
NOTE 24 – SUBSEQUENT EVENTS
On October 2, 2018, we completed the At-The-Market equity offering managed by The Benchmark Company, LLC and ViewTrade Securities, Inc. as described in the prospectus supplements filed with the SEC on September 24, 2018 and October 1, 2018. A total of 3,854,375 shares of common stock were sold at a weighted average stock price of approximately $6.12, representing gross proceeds of approximately $23.6 million. The Company is no longer offering shares of common stock under these programs.
On October 4, 2018, we filed a provisional method and composition patent application (IGC-509) with the U.S. Patent and Trademark Office (USPTO) for the treatment of fatigue and energy restoration. This patent filing is one of a series of steps in the Company’s development and commercialization plan to support the creation of a branded, hemp/CBD sugar-free energy drink, which was previously disclosed by the Company on September 25, 2018.
| Q2 2019 Form 10-Q