IGC Pharma, Inc.

Previous wording

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to provide an understanding of IGC Pharma, Inc.’s (“IGC,” “IGC Pharma,” 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 nine months ended December 31, 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.

Current wording

The purpose of this Management’s Discussion and Analysis (MD&A) is to provide an understanding of IGC Pharma, Inc.’s (“IGC,” “IGC Pharma,” 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 ended June 30, 2025, and the Annual Report on Form 10-K for the fiscal year ended March 31, 2025, filed with the SEC on June 27, 2025 (the 2025 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.

Previous wording

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”).

Current wording

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 faster than traditional medications. While existing anti-psychotics can take as long 6 to 12 weeks to show effects, we believe IGC-AD1 has the potential to act within two weeks. This potentially 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).

Previous wording

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.

Current wording

We believe that additional investment in clinical trials, AI, R&D, facilities, marketing, advertising, and the 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.

Previous wording

Revenue– Revenue was approximately $257 thousand and $204 thousand for the three months ended December 31, 2024, and December 31, 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.

Current wording

Revenue– Revenue was approximately $328 thousand and $272 thousand for the three months ended June 30, 2025, and June 30, 2024, 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. Our core focus is on advancing IGC-AD1, completing the Phase 2 trial, and developing MINT-AD for the early diagnosis of Alzheimer’s disease. In the future, our revenue from white label may not increase as we allocate more resources to expanding our core pharma-focused programs.

Previous wording

Cost of revenue – Cost of revenue amounted to approximately $153 thousand for the three months ended December 31, 2024, compared to $71 thousand in the three months ended December 31, 2023, this represents gross margins of 40% and 65%, 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.

Current wording

Cost of revenue – Cost of revenue amounted to approximately $174 thousand for the three months ended June 30, 2025, compared to $109 thousand in the three months ended June 30, 2024. This represents gross margins of 47% 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 and services in both segments. The slight decrease in gross margin is attributed to the Company’s strategic efforts to develop new formulations using a broader range of active ingredients, which, while affecting margins in the short term, are expected to open new commercial avenues in the long term.

Previous wording

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 ended December 31, 2024, SG&A expenses decreased by approximately $1.1 million or 49% to approximately $1.0 million, from approximately $2.2 million recorded for the three months ended December 31, 2023. The decrease of $1.1 million is attributed to a one-time expense of approximately $734 thousand during the three months ended December 31, 2023, and the focus of management on cost efficiency in marketing and corporate expenses during the three months ended December 31, 2024.

Current wording

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 ended June 30, 2025, SG&A expenses decreased by approximately $462 thousand or 28% to approximately $1.2 million as compared to the three months ended June 30, 2024. This significant decline in SG&A expenses is attributable to the Company’s focused efforts to optimize corporate-level operational efficiency by lowering employee–related costs due to headcount alignment and compensation restructuring, implementing better inventory management systems, and reducing spending on legal and professional services through more efficient vendor management. These optimizations allowed the Company to preserve capital and extend its operational runway while maintaining the infrastructure necessary to support clinical development and strategic initiatives.

Previous wording

Research and development expenses (“R&D”)– R&D expenses were attributed to our Life Sciences segment. The R&D expenses decreased by approximately $51 thousand or 6% to approximately $852 thousand during the three months ended December 31, 2024, from approximately $903 thousand. 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.

Current wording

Research and Development expenses (R&D)– R&D expenses were attributed to our Life Sciences segment. The R&D expenses decreased by approximately $38 thousand or 4% to approximately $851 thousand during the three months ended June 30, 2025, from approximately $889 thousand. The decrease is primarily due to a one-time non-cash expense of approximately $100 thousand in three months ended June 30, 2024. One-time expense adjusted, there is an increase in R&D expenses by $62 thousand. The R&D expenses are primarily attributed to the progression of Phase 2 trials on IGC-AD1 and preclinical studies on TGR-63, indicating the Company’s dedication to advancing its product pipeline. As the development of TGR-63 and the Phase 2 trial on Alzheimer’s gains momentum, the Company anticipates an increase in R&D expenses.

Previous wording

Other income, net – Other net income increased by approximately $17 thousand or 53% during the thousand months ended December 31, 2024. As a result, the total other income for the three months ended December 31, 2024, and 2023, is approximately $49 thousand and $32 thousand, respectively. Other income includes interest and rental income, profit from the sale of assets, unrealized gains from investments, and one-time awards or prizes, among others.

Current wording

Other income, net – Other net income increased by approximately $288 thousand or 1,600% during the three months ended June 30, 2025. As a result, the total other income for the three months ended June 30, 2025, and 2024 is approximately $306 thousand and $18 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. The primary reason for increase is a tax credit of approximately $263 thousand company received during three months ended June 30, 2025.

Previous wording

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.

Current wording

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 the Company’s commitments and contractual obligations.

Previous wording

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.

Current wording

On June 24, 2025, the Company entered into an amendment to extend the Credit Agreement. The amendment extends the term of the Credit Agreement, which was set to expire, under the same terms and conditions as previously disclosed, with the exception of i) a reduction in the facility fees from $84,000 to $48,000 and ii) interest, calculated according to the interest rate mentioned in the Certificate of Deposit, as the case may be, plus an applicable margin of 1.2%, instead of 1%. All other material terms of the Credit Agreement remain unchanged.

Previous wording

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 received piggyback registration rights subject to certain restrictions.

Current wording

In the first quarter of Fiscal 2026, the Company entered into the 2025 Share Purchase Agreements (2025 SPAs) with multiple investors, relating to the sale and issuance by our company to the investors of an aggregate of 2,803,333 shares of our common stock, for a total purchase price of $841,000 , or $0.30 per share, subject to the terms and conditions set forth in the 2025 SPAs. The investments are subject to customary closing conditions, including NYSE approval. As per the 2025 SPA, the investor received piggyback registration rights subject to certain restrictions.

Previous wording

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.

Current wording

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. The Company expects to raise further capital for its research and development initiatives as and when it is able to do so, in an ATM offering or private placement. 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. Please refer to Note 13 – “Securities”, for more information.

Previous wording

Net cash used in operating activities for the nine months ended December 31, 2023, was approximately $4.6 million. It consists of a net loss of approximately $10.1 million, a positive impact on cash due to non-cash expenses of approximately $5.2 million, and a positive change in operating assets and liabilities of approximately $220 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $473 thousand, stock-based expenses of approximately $1.4 million, impairment loss of approximately $3.3 million and an approximately $42 thousand decrease in other non-cash items. In addition, changes in operating assets and liabilities had a positive impact of approximately $220 thousand on cash, of which approximately $169 thousand is due to a decrease in deposits and advances, approximately $117 thousand increase in accounts payable, approximately $83 thousand decrease in accrued and other liabilities and approximately $20 thousand increase in other net current assets and liabilities.

Current wording

Net cash used in operating activities for the three months ended June 30, 2025, was approximately $1.4 million. It consists of a net loss of approximately $1.6 million, a positive impact on cash due to non-cash expenses of approximately $569 thousand, and a negative change in operating assets and liabilities of approximately $377 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $141 thousand, stock-based expenses of approximately $452 thousand, and other non-cash items with a negative impact of approximately $24 thousand. In addition, changes in operating assets and liabilities had a negative impact of approximately $377 thousand on cash, of which a net negative impact of approximately $53 thousand is due to an increase in accounts receivables, and a negative impact of approximately $599 thousand is due to decrease in accrued and other liabilities, a positive impact of approximately $183 thousand is due to decrease in deposits and advances, a positive impact of approximately $51 thousand is due to increase in accounts payable and net other current assets and liabilities of approximately $41 thousand.

Previous wording

Net cash used in operating activities for the nine months ended December 31, 2024, was approximately $4.1 million. It consists of a net loss of approximately $5.9 million, a positive impact on cash due to non-cash expenses of approximately $1.6 million, and a positive change in operating assets and liabilities of approximately $224 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $464 thousand and stock-based expenses of approximately $1.2 million. In addition, changes in operating assets and liabilities had a positive impact of approximately $224 thousand on cash, of which a net negative impact of approximately $190 thousand is due to an increase in deposits and advances, and a positive impact of approximately $251 thousand is due to increase in accrued and other liabilities, a net positive impact of approximately $107 thousand is due to an increase in inventory and net other current assets and liabilities of approximately $56 thousand.

Current wording

Net cash used in operating activities for the three months ended June 30, 2024, was approximately $1.8 million. It consists of a net loss of approximately $2.4 million, a positive impact on cash due to non-cash expenses of approximately $564 thousand, and a positive change in operating assets and liabilities of approximately $62 thousand. Non-cash expenses consist of an amortization and depreciation charge of approximately $162 thousand and stock-based expenses of approximately $402 thousand. In addition, changes in operating assets and liabilities had a positive impact of approximately $62 thousand on cash, of which a net negative impact of approximately $118 thousand is due to an increase in deposits and advances, and a positive impact of approximately $151 thousand is due to increase in accrued and other liabilities, and net other current assets and liabilities of approximately $29 thousand.

Previous wording

Net cash provided by investing activities for the nine months ended December 31, 2023, was approximately $6 thousand, which comprised of expenses of approximately $67 thousand for the acquisition filing expenses related to intellectual property, approximately $81 thousand for the net purchase of property, plant, and equipment and approximately $154 thousand of investment in marketable securities.

Current wording

Net cash provided by investing activities for the three months ended June 30, 2025, was approximately $580 thousand, which comprised of approximately $114 thousand for the acquisition and development of intangible assets, and approximately $693 thousand for the net purchase of property, plant, and equipment.

Previous wording

Net cash used in investing activities for the nine months ended December 31, 2024, was approximately $300 thousand, which is comprised of expenses of approximately $252 thousand for the acquisition, and development of intangible assets, and approximately $78 thousand for the net purchase of property, plant, and equipment.

Current wording

Net cash used in investing activities for the three months ended June 30, 2024, was approximately $131 thousand, which comprised of expenses of approximately $93 thousand for the acquisition and development of intangible assets, and approximately $38 thousand for the net purchase of property, plant, and equipment.

Previous wording

Net cash provided by financing activities was approximately $2.9 million for the nine months ended December 31, 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 $3 thousand.

Current wording

Net cash provided by financing activities was approximately $851 thousand for the three months ended June 30, 2025, which was comprised of net proceeds from issuance of equity stock of approximately $852 thousand and re-payment of the loan of approximately $1 thousand. Please refer to Note 13 – “Securities”, for more information.

Previous wording

Net cash provided by financing activities was approximately $3.6 million for the nine months ended December 31, 2024, which is comprised of net proceeds from issuance of equity stock of approximately $3.6 million, and offset by the re-payment of the loan of approximately $3 thousand. Please refer to Note 13 – “Securities”, for more information.

Current wording

Net cash provided by financing activities was approximately $2.5 million for the three months ended June 30, 2024, which was comprised of net proceeds from issuance of equity stock of approximately $2.5 million and re-payment of the loan of approximately $1 thousand. Please refer to Note 13 – “Securities”, for more information.

Previous wording

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.

Current wording

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 that the following policy that falls within this category in addition to the policies on revenue recognition, inventory, accounts receivable, foreign currency translation, impairment of long-lived assets and investments, stock-based compensation, and cybersecurity: