IGC Pharma, Inc. 10-K

ITEM 1. BUSINESS Company Overview Since 2014, our team has been committed to researching the application of cannabinoids such as Tetrahydrocannabinol (“THC”) and Cannabidiol (“CBD”) in combination with other compounds to address various ailments, including Alzheimer's disease. With our research, we have developed intellectual property, formulations, and wellness and lifestyle brands. In fiscal year ended March 31, 2021 (“Fiscal 2021”), we were awarded a patent for our cannabinoid-based formulation treatment of seizures in humans and veterinary animals. This followed our fiscal year ended March 31, 2019 (“Fiscal 2019”) and fiscal year ended March 31, 2020 (“Fiscal 2020”) awards of patents for our formulation addressing pain and formulation addressing Cachexia and eating disorders, respectively. Since 2014, the Company has also filed nine other patent applications to address various diseases such as Alzheimer's, pain, stammering, seizures, eating disorders, and fatigue, among others. Our goal is to bring products to market based on our intellectual property (“IP”) in one of three channels: 1. We are developing a range of products for the pharmaceutical markets which are subject to FDA-approved clinical trials. We currently have one investigational product in clinical trials under an INDA filed with the FDA. 2. We are currently developing branded wellness and lifestyle products intended to be sold in diverse retail channels subject to Federal laws in the U.S. and abroad. 3. Finally, we will be seeking partnerships and licensing agreements with third parties who we anticipate will provide a clear route to market our IP. In the Pharmaceutical channel, we created a patent-pending formulation based on ultra-low dosing of THC in combination with other compounds that, in 2021, under an INDA filed with the FDA, underwent the first stage of a phase 1 trial on safety and tolerability. The phase 1 trial is ongoing at the time of this filing. We are motivated by the potential that, with future successful results from appropriate further trials, IGC-AD1 could contribute to relief for some of the 50 million people around the world expected to be impacted by Alzheimer's disease by 2030 (WHO, 2020). Data from pre-clinical studies, including cell lines and animal models, showed the formulation, IGC-AD1, inhibited the accumulation of the neurotoxic protein beta-amyloid (“Aβ”) that leads to the buildup of plaques, as well as the hyperphosphorylation of protein Tau that leads to Neuro Fibrillary Tangles (“NFT”) two of the hallmarks of Alzheimer's disease. In pre-clinical studies, certain combinations of IGC-AD1 also showed memory improvement and neurogenesis. Our lead cannabinoid-based investigational drug is based on a pharmaceutical formulation comprising of purified plant-derived THC for which we have filed several patent applications and acquired rights to other patent applications. Following the conclusion of our phase 1 trial, and the evaluation of its results, we hope to initiate phase 2 trials to obtain efficacy data for Behavioral and Psychological Symptoms of Dementia (“BPSD”) and to evaluate IGC-AD1 for additional indications such as anxiety and sleep disorders. In addition, our pipeline of pharmaceutical formulations includes cannabinoid product candidates for pain and various potential targets within central nervous system disorders. For the Retail Channel, in Fiscal 2021, we developed wellness and lifestyle brands, Holief™, Herbo™, and Sunday Seltzer™. We plan on marketing these brands, including to the U.S. based Latino market, which is among the fastest-growing segment in the U.S. GDP, that in 2018 was around $2.6 Trillion. (Forbes, 2020). It is projected that the Hispanic population will reach 111.22 million by 2060 from 59 million in 2018 (Statista, 2021). Holief, which includes our patented cream, is a brand focused on alleviating and reducing pain symptoms. It includes, among other products, targeted products for women suffering from period pain. Information is available on www.holief.com. Herbo is a premium hemp-based CBD infused organic topical and spa line of products targeting the wellness market. The products, CBD infused body lotion, body butter, and others, all carry a signature fragrance that was developed by us. Information is available on www.herbo.com. 5 Table of Contents Sunday Seltzer is a premium hemp-based CBD infused seltzer that is available in several flavors including grapefruit, lemon, blackberry, cucumber, ginger, and passion fruit. The products are all low- or no-calorie beverage options available in select stores in New Jersey as well as online. For more information, please visit www.sundayseltzer.com. All of our cannabinoid-based product lines are pursued in accordance with all applicable federal, state, and local laws and regulations. We also operate an infrastructure segment, managed from India, that involves the execution of construction projects, the purchase and resale of physical commodities mostly used in infrastructure, and the rental of heavy construction equipment. During and as a result of the COVID-19 pandemic, this segment slowed down considerably. We anticipate returning to pre-pandemic-level operations in this line of business when the pandemic allows. We are a Maryland corporation established in 2005 with a fiscal year that is the 52- or 53-week period that ends on March 31. COVID-19 Update As our infrastructure business is based in Asia (India and Hong Kong), the COVID-19 pandemic and restrictions imposed by governmental entities adversely impacted, and continues to adversely impact, our financial condition, liquidity, and operations. In Fiscal 2021, we experienced substantially reduced revenue from Infrastructure segment. We anticipate that reduced revenue from Infrastructure segment will continue in Fiscal 2022 as the pandemic continues to affect the regions where we do business. In particular, during Fiscal 2021: 1. Our revenue from the infrastructure business was adversely affected with increased expenses. We are executing a road building contract in Kerala, India valued at approximately $1.2 million. Work on this project is sporadic based on COVID-19 restrictions. 2. In response to the COVID-19 pandemic, we manufactured and distributed alcohol-based hand sanitizers. The majority of our revenue for Fiscal 2021 is from the sale of hand sanitizers. In an effort to help some of the hardest hit communities, we donated hand sanitizers to the Federal Emergency Management Agency (“FEMA”), the Navajo Nation in Arizona, the Crow reservation in Montana, and the Sioux reservation in South Dakota. 3. Due to the pandemic, we were unable to process our harvested hemp crop grown in Arizona because of difficulties associated with transportation and third-party processing. Intellectual Property As part of our intellectual property strategy, we seek appropriate patent protection for applicable product candidates, drug delivery systems, and molecular modifications, as well as other proprietary technologies and their uses, by filing patent applications in the U.S. and select other countries. We intend for these patent applications to cover, where possible, claims for medical uses, processes for preparation, and processes for delivery and formulations. The Company holds all rights to the patents that have been filed by us with the United States Patent and Trademark office (“USPTO”). In Fiscal 2017, the Company also acquired exclusive rights to the data and the patent filing from University of South Florida (“USF”). Although the Company believes the registration of patents is an important part of its business strategy and its success depends in part on such registration, the Company cannot guarantee that such patent filings will result in a successful registration with the USPTO. Please see Item 1A, Risk Factors- “We may not successfully register the provisional patents with the USPTO.” 6 Table of Contents The table below provides a status of our patent filings: Formulation Indication Provisional Filing PCT Filing Status IGC-501 Pain 09/16/14 09/16/15 Patent issued on 11/06/2018 (#10,117,891) IGC-502 Seizures 01/25/15 01/14/16 Patent issued on 08/05/2020 (#10,751,300) IGC-503 Seizures 04/01/15 03/25/16 Pending IGC-504 Eating Disorders 08/12/15 08/11/16 Patent issued on 03/24/2020 (#10,596,159 B2) IGC-505 Seizures 06/15/16 06/15/16 Pending IGC-506 Eating Disorders 02/28/17 02/27/18 Pending IGC-507 IGC-AD1 Alzheimer’s Disease 07/30/15 01/03/19 Pending IGC-508 CNS Disorders 03/29/18 03/29/19 Pending IGC-509 Fatigue and energy restoration 10/4/18 10/04/19 Pending IGC-510 Stammering, Tourette’s syndrome 05/23/19 07/21/20 Pending IGC 511 CBD & Method for Treating Pain (2 nd ) 07/17/20 Anticipated in Fiscal 2022 Pending IGC 512 Stress relief & calm restoring beverage 12/02/20 Anticipated in Fiscal 2022 Pending Alzheimer ’ s disease According to the National Institute of Health’s National Institute on Aging (“NIA”), Alzheimer’s is an irreversible progressive brain disorder that destroys memory and thinking skills and, eventually the ability to carry out even the simplest of tasks. Symptoms for most people may first appear for individuals at ages in their mid-60s. Some experts believe that Alzheimer’s is the third leading cause of death just behind heart disease and cancer. (NIA, 2019) According to the World Health Organization (“WHO”), Alzheimer’s is believed to cause about 60-70% of dementia, which is the loss of cognitive functioning that includes thinking, remembering, reasoning and behavioral abilities. Alzheimer’s disease is expected to effect approximately 50 million people worldwide by 2030 (WHO, 2020). According to the Alzheimer’s Association, approximately 10% of Americans over 65 have Alzheimer’s disease, and some researchers suspect that half of people over 80 develop Alzheimer’s (Piedmont Healthcare, (n.d); Alzheimer’s Association, 2021). While some researchers view Alzheimer’s as a spectrum disease (Devi, (n.d), the NIA categorizes Alzheimer’s in three stages - mild, moderate and severe (NIA, 2019). Broadly, in mild Alzheimer’s, problems can include wandering; getting lost, not remembering the way home for example; trouble handling money and paying bills; repeating questions; and personality and behavior changes. In moderate Alzheimer’s, there is damage to the areas of the brain that control language, reasoning, sensory processing, and conscious thought. Problems can include difficulty carrying out multistep tasks such as dancing, getting dressed, and more behavior changes including hallucinations, delusions, paranoia, and impulsive behavior. By the time severe Alzheimer’s sets in, plaques and tangles spread throughout the brain, and the brain shrinks significantly. People with severe Alzheimer’s are completely dependent on others for care, they cannot communicate, and near the end, the body shuts down (NIA, 2019). Alzheimer’s patients manifest BPSD that include, among others, depression, agitation, aggression, sleep disturbance (sundown syndrome), delusions, hallucinations, and anxiety. These symptoms put a burden on caregivers that leads to caregiver distress (Cheng, 2017). Our Phase 1 trial on IGC-AD1 has commenced on patients suffering from mild to severe dementia due to Alzheimer’s disease. Phase 1 Trial updates On July 30, 2020, we received a notice from the FDA to proceed with a 12-subject Phase 1 human clinical trial (“removal of full clinical hold”) on our INDA, submitted under Section 505(i) of the Federal Food, Drug, and Cosmetic Act, for our “IGC-AD1” proprietary formulation. Our IGC-AD1 formulation is based on a patent filed by the University of South Florida (“USF”) that uses a cannabinoid as one of the active ingredients. We have exclusive rights to the patent filing. IGC-AD1, an oral tincture, is also modelled around the patent filing by USF. On May 14, 2021, the Company announced it had completed Cohort 1 of three anticipated cohorts in its Phase 1 trial. This was followed by Company announcement for completion of Cohort 2 on June 7, 2021. 7 Table of Contents IGC’s Phase 1 study is a placebo-controlled Multiple Ascending Dose (“MAD”) study on individuals suffering from Alzheimer’s disease. This study is also evaluating the pharmacokinetics and genotyping of CYP2C9 polymorphisms to determine impact on THC metabolism. For example, the study includes evaluating whether individuals with a particular polymorphism of the CYP2C9 gene impacts the metabolism of THC, as compared to other individuals. The Company hopes that this data on pharmacogenetics can eventually inform IGC on effective dosing for patients with a specific CYP2C9 polymorphism, and better predict outcomes such as the impact of its THC-based investigational new drug IGC-AD1 or its interactions with other medications. For Cohort 1, we administered one dose of IGC-AD1 per day. We increased the dosage to two doses of IGC-AD1 per day in Cohort 2. In Cohort 3, we plan to escalate to three doses per day. Alzheimer’s participants are monitored daily for safety, and for certain behavioral changes using, among others, the Neuropsychiatric Inventory (“NPI”) scale. As part of the clinical trial process, an independent Data and Safety Monitoring Committee (“DSMC”) monitors patient safety data and other factors. A DSMC consists of industry experts with no affiliation to the trial sponsor, which in this case is IGC Pharma, LLC, a subsidiary of IGC. The DSMC typically recommends that a trial continue or terminate based on the committee’s evaluation of trial safety data. The DSMC for IGC’s trial, having reviewed Cohort 1 and Cohort 2 data on Alzheimer’s participants, has recommended progressing to Cohort 3. The Phase 1 trial is currently anticipated to conclude during the second quarter of the Fiscal 2022. Products & Services Life Sciences segment This segment is a) dedicated to research on cannabinoids and their safety and efficacy on diseases and ailments, and b) the creation, marketing, and sales of wellness and lifestyle brands. CBD mentioned in the context of products, refers to hemp extracts naturally rich in cannabinoids like CBD, but with THC 0.3% or less by dry weight. In Fiscal 2021, we advanced the development and launch of several brands among our “house of brands” in accordance with applicable laws and regulations. We are enthusiastic about what we believe to be the potential of these concepts to address various segments of the growing cannabinoid based wellness and lifestyle product market. In Fiscal 2021, the Company generated $723 thousand of revenue from its Life Sciences segment, primarily from the sale of hand sanitizers under various Company brands. However, COVID-19 has forced the Company to delay and limit the launch of some of the brands and products. Hyalolex ™ The original formulation of Hyalolex™ Drops of Clarity™ is based on work that was done at USF. USF filed a patent that we acquired and continued to pursue by responding to queries by the USPTO in Fiscal 2021. The research performed by USF indicated that in Alzheimer’s cell lines, Alzheimer’s animal models, and in some human studies, the active ingredients in Hyalolex™ Drops of Clarity™, may effectively alleviate many of the symptoms associated with Alzheimer’s. The research and cell data indicated a reduction in the aggregation of amyloid protein (“Aβ protein”) that deposits as plaque between neurons, leading to interference with intra-neuronal signaling (NCBI, 2010). The research also showed a reduction in Neurofibrillary Tangles (“NFTs”) by reducing the hyperphosphorylation of microtubule-associated protein Tau that leads to neuronal death. Plaques and NFTs are the hallmarks of Alzheimer’s. Patients with Alzheimer’s disease may suffer from a variety of BPSD including anxiety, agitation, dementia, depression, and sleep disorder, among others. These symptoms often result in hard-to-manage patients and caregiver distress. Application of our formulation in animal studies using transgenic Alzheimer’s mice (mice with Alzheimer’s) showed an improvement in memory. These results led our team to create Hyalolex™ Drops of Clarity™ as an oral formulation. The product was test marketed in Puerto Rico. A version of this formulation (IGC-AD1) is currently filed as an INDA with the FDA, for which we are conducting a phase 1 trial. We do not presently expect to market Hyalolex Drops of Clarity widely while the Company is pursuing its INDA. Holi Hemp ™ In Fiscal 2021, we prepared our production facility to offer trading, distillation, tolling, and white labeling services under the brand of Holi Hemp™. However, due to COVID-19, we were unable to complete the commissioning of all the equipment. We expect that when the equipment is commissioned, COVID-19 permitting, we will be vertically integrated in the hemp industry, where we can control the processing and production of products as well as offer services such as distillation of extracted hemp crude. 8 Table of Contents Holief ™ In Fiscal 2021 we completed the branding and development of Holief. “Holief” is derived from the words holistic and relief. The brand is made up of hemp-based CBD infused products including our patented formulation for treating pain and other products that use a combination of an analgesic and CBD, to help provide a natural, alternative to pain medications, such as opioids. Under this brand, we have in particular, created several products for women. These include a menthol (analgesic) and CBD cream designed to help alleviate period cramps. In addition, we created a tincture containing CBD, primrose oil, and peppermint oil to help with Post Menstrual Symptoms. We expect to market these products online and through retail outlets in accordance with applicable law and regulation. Herbo ™ In Fiscal 2021 the Company completed the branding and development of Herbo, a premium hemp-based CBD infused organic topical and spa line of products. The products all carry a signature fragrance derived from sandalwood oil, rose, lavender, cypress, and hemp. The products are topicals such as our CBD infused body lotion, body butter, body oil and menthol body balm. We expect to market these products online and through retail outlets in accordance with applicable law and regulation. Sunday Seltzer ™ In Fiscal 2021 the Company completed the branding and development of Sunday Seltzer, a premium hemp-based CBD infused seltzer. Sunday Seltzer is available in several flavors including grapefruit, lemon, blackberry, cucumber, ginger, and passion fruit. Our initial launch of the product is in retail stores in New Jersey, New York, and Connecticut. The products are all low- or no-calorie beverage options. Infrastructure segment We have been operating the infrastructure business since 2008. Our revenue in Fiscal 2020 was primarily derived from this segment and included: a) Execution of Construction Contracts – The Company is executing a road building contract in Kerala, India valued at approximately $1.2 million. Work on this project is sporadic based on COVID-19 restrictions. b) Purchase and Resale of Physical Commodities Used in Infrastructure – This business line includes the purchase and resale of infrastructure materials including steel, wooden doors, marble, and tiles, among others. This work has been adversely affected by the COVID-19 pandemic. There was no revenue from this business line during Fiscal 2021. c) Rental of Heavy Construction Equipment – We own heavy construction equipment such as motor grader and rollers, that we rent to construction contractors. This business is seasonal and had minimal revenue during Fiscal 2021. Business Strategy We have a two-pronged strategy for our Life Sciences, biopharmaceutical component: the initial prong is to investigate IGC-AD1 for efficacy in managing the symptoms of Alzheimer’s disease. This involves conducting Phase 1 through Phase 3 trials on IGC-AD1 over the next several years, with the anticipated goal of demonstrating efficacy and potentially obtaining FDA approval for IGC-AD1 as a cannabinoid-based formulation that can help manage some symptoms for patients suffering from Alzheimer’s disease. The second prong is to investigate the potential efficacy of IGC-AD1 on memory and/or decreasing or managing plaques and tangles, some of the hallmarks of Alzheimer’s disease. Our pipeline of investigational cannabinoid formulations includes pain creams and tinctures for pain relief. We believe that the biopharmaceutical component of our Life Sciences strategy will take several years and involves considerable risk; however, we believe it may involve greater defensible growth potential and first-to-market advantage. We believe that additional investment in clinical trials, research and development (“R&D”), facilities, marketing, and advertising, as well and the acquisition of products and businesses supporting our Life Sciences segment, are likely to be critical to the development and delivery of innovative products and positive patient and customer experiences. Part of our strategy is to leverage our R&D and our intellectual property, to develop products that we believe are likely to be well differentiated and supported by science through planned pre-clinical and clinical trials. 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. 9 Table of Contents Our shorter-term strategy also includes becoming vertically integrated in the hemp industry, as we believe this may afford us the opportunity to create the right processes, quality, and replicability for eventually creating pharmaceutical grade formulations. We also believe this may provide us with several profit opportunities, all conducted in accordance with applicable laws and regulations, and only in locations where it is legal to do so, such as: ● sale of our products, under the Herbo™, Hyalolex™, Holief™, and Sunday Seltzer™ brand lines, among others; ● white labeling of products such as hemp-based CBD infused lotions, creams, and oils for other brands; ● wholesale of hemp extracts including hemp crude extract and hemp isolate; ● processing of hemp biomass and crude oil for farmers in the Northwest U.S. and Canada; and ● using our manufacturing and trading platform for trading in infrastructure commodities to assist in delivering emergency products such as hand sanitizers, gloves, and other personal protection equipment for the length of the COVID-19 pandemic. Our strategy for the Infrastructure segment is to invest in and competitively bid on construction contracts, for example to build roads, bridges and other civil works in Kerala, India, and to opportunistically buy and sell infrastructure and other commodities, as well as personal protection equipment. We are currently experiencing a lack of certainty in this business segment due to the COVID-19 pandemic and stay-at-home and shelter in place orders, especially in India and Hong Kong. Markets and Distribution Life Sciences segment Our brands are designed to address different demographics and segments of the market. For example, Sunday Seltzer™ addresses the infused seltzer market. Herbo™ addresses the spa and wellness market. Holief™ addresses the pain market, including the menstrual cramp market. We plan on marketing these brands to the U.S. Latino market as this is among the fastest-growing segment in the U.S. GDP that in 2018 was around $2.6 Trillion. (Forbes, 2020). It is projected that the Hispanic population will reach 111.22 million by 2060 from 59 million in 2018 (Statista, 2021). In Fiscal 2021, we have two customers and three suppliers of raw materials, which accounts for over 10% of sales and cost of sales. The COVID-19 pandemic has and might continue to affect our operations which could be reflected in reduced revenue and increased costs in our Life Sciences segment in Fiscal 2022. Revenue from our Life Sciences is less than 1% based on global revenue of relevant markets. Overall, U.S. sales of cannabis and hemp-derived CBD products are expected to increase in all channels—dispensary, general retail and pharmaceutical, to $20.5 billion by 2025, a compound annual growth rate (“CAGR”) of more than 40% (BDSA, 2020). The global CBD skin care market size is anticipated to reach $3.48 billion by 2026, with a CAGR of 24.80% during the forecast period (Allied Market Research, n.d.). Overall revenue in the Skin Care segment amounts to about $18 billion in the U.S. in 2021. The market is expected to grow annually by approximately 5.01% (CAGR 2021-2025) (Statista, n.d.). The market is primarily driven by growing awareness with respect to the perceived benefits of CBD infused personal care products. The U.S. Cannabis infused drink market is also expected to reach $1.4 billion by 2023 (Statista, 2020). Revenue from hand sanitizer amounted to $360.58 million in U.S. in 2021. The market is expected to grow annually by 8.47% (CAGR 2021-2025) (Statista, 2021). Infrastructure segment The state of Kerala and the National Highway Authority of India publish Request for Proposals (“RFP”) with a Statement of Work (“SOW” ) for the building of various infrastructure projects such as roads, bridges, by-passes, etc. In Fiscal 2021, we focused on executing a construction project in the state of Kerala. We also purchase and resell physical commodities that are used in the construction business by constructions companies. In addition, we maintain a small fleet of heavy construction equipment in Kerala consisting of motor grader, rollers, etc., that is leased out to construction companies. In Fiscal 2021, we have a total of 1 customer and 1 subcontractor/suppliers of infrastructure materials, which account for over 10% of sales and cost of sales. For the level of business, and the value of each trade, we believe that the number of customers we have does not constitute inordinate customer risk. However, there has been a marked disruption of the Hong Kong economy which combined with the impact of COVID-19 on our operations is reflected in reduced revenue and increased expenses in our infrastructure business in Fiscal 2021. The total revenue from our infrastructure business is less than 1% of the global revenue of the rental, construction, and infrastructure commodities markets. 10 Table of Contents Business Seasonality The Company has historically experienced seasonality in the Infrastructure segment based on low work in construction during the monsoon season. Moreover, as most of the hemp harvest in America occurs in the fall, there tends to be pricing pressure based on the volume of hemp biomass being harvested. Competition Some of the markets for the Company’s products and services are highly competitive, and some are not, as described below: 1. Life Sciences segment: We are focused on developing affordable FDA approved medical products that can help individuals suffering from debilitating disease like Alzheimer’s and chronic pain, among others. We believe our differentiation from our competitors, for example, in the use of phytocannabinoids for the management of symptoms related to Alzheimer’s, is based primarily on our data, patent filings, and experienced team, offering us an early-mover advantage. We face competition from well-funded seasoned companies. On the wellness and lifestyle side, we face competition from companies that are better established in wholesale products such as hemp crude extract, hemp isolate and services such as white labeling and tolling. On the product side we face competition from companies in the food, beverage, and skin care industries. It is unclear how the FDA guidance and ruling on hemp-based CBD infused food products, when it is released, will impact the market. 2. Infrastructure segment: This business is currently limited to India and Hong Kong. The infrastructure industry is highly competitive, and we believe our differentiation is based primarily on price and industry knowledge of construction and commodity requirements for infrastructure projects in the areas in which we operate. Regulatory Despite the passage of the 2018 Farm Bill, the FDA has not set out guidance or rules on the infusion of hemp-based CBD into food and beverage products. While this has and continues to create a complicated framework within which we navigate, we anticipate that when such rules are set out, the demand for CBD will increase as major food and beverage manufacturers will enter the market. Core business competencies and advantages Our core competencies include the following: ● a network of doctors, scientists with Ph.D. degrees and intellectual property legal experts that have a sophisticated understanding of drug discovery, research, FDA filings, intellectual protection, and product formulation; ● knowledge of various cannabinoid strains, their phytocannabinoid profile, extraction methodology and impact on various pathways; ● knowledge of plant and cannabinoid based combination therapies; ● knowledge of research and development in the field; ● patents IGC-501, IGC-504 and IGC-502 for treatment of pain, treatment of cachexia and eating disorders in humans and veterinary animals, and treatment of seizures in humans and veterinary animals, respectively; and ● facilities and a team with experience in manufacturing, marketing, and selling products. Licenses, Technology and Cybersecurity We have intellectual property attorneys that advise, counsel, and represent the Company regarding the filing of patents or provisional patent applications, copyrights applications and trademark applications; trade secret laws of general applicability; employee confidentiality and invention assignment. Most of our data, including our accounting data, is stored in the cloud that helps us mitigate the overall risk of losing data. We have a cybersecurity policy in place and are in the process of implementing tighter cybersecurity measures to safeguard against hackers. The Company holds all rights to the patents that have been filed by us with the USPTO. 11 Table of Contents The table below summarizes the nature of activity, type of license required and held, and encumbrances in obtaining permits for each location where the company operated through its subsidiaries in Fiscal 2021: Location Nature of Activity Type of License Required Type of License held Encumbrances in Obtaining Permit U.S. Life Sciences products and General Management General business License to grow hemp Industrial Alcohol User Permit Clinical Trials Good Manufacturing Practices (GMP) certification General business licenses License to grow hemp Industrial Alcohol User Permit Clinical Trials Pending None. India Infrastructure Contract, Rental of heavy equipment and land General business license Business registrations with tax authorities in various states in India None. Colombia Life Sciences products and General Management General business license Instituto Nacional de Vigilancia de Medicamentos y Alimentos (INVIMA) Permits Fondo Nacional De Estupefacientes (FNE) Permits General business license Instituto Nacional de Vigilancia de Medicamentos y Alimentos (INVIMA) Permits Fondo Nacional De Estupefacientes (FNE) Permits None. Hong Kong Purchase and Resale of physical commodities General business license General business license None. Governmental Regulations In the U.S. we are subject to oversight and regulations, for some or all of our activities, by the following agencies: SEC, state regulators, NYSE, FTC, and the FDA. The cannabis plant consists of several strains or varieties. Hemp and Marijuana are both cannabis plants. Under the 2018 Farm Bill, Hemp is classified as a cannabis plant that has THC 0.3% or less by dry weight. Marijuana is classified as a cannabis plant that has THC above 0.3% by dry weight. Marijuana remains illegal under federal law, including in those states in which the use of marijuana has been legalized for medical and or recreational use. On the other hand, the 2018 Farm Bill, which was effective January 1, 2019 contains provisions that make industrial hemp legal. Although, hemp is legal at the federal level, most states have created licensing and testing processes for the growing, processing, and sale of hemp and hemp-derived products. For our business we must apply for licenses in states where we desire to grow and process hemp. For example, in the state of Arizona, where we grew hemp, we were required to apply for licenses and register with the state the geo-location of all our operations, including the land on which hemp was grown and the facilitates where hemp will be processed. These regulations are evolving, differ from jurisdiction to jurisdiction, and are subject to change. FDA Approval Process In the U.S., pharmaceutical products are subject to extensive regulation by the FDA. The Federal Food, Drug and Cosmetic Act, or the FDC Act, and other federal and state statutes and regulations, govern the research, development, testing, manufacturing, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and importing and exporting of pharmaceutical products, among other things. Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical holds, FDA refusal to approve pending New Drug Applications (“NDA”), warning letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, civil penalties, and criminal prosecution. Pharmaceutical product development in the U.S. typically involves pre-clinical laboratory and animal tests and the submission to the FDA of an Investigational New Drug (“IND”), which must become effective before clinical testing may commence. For commercial approval, the sponsor must submit adequate tests by all methods reasonably applicable to show that the drug is safe for use under the conditions prescribed, recommended, or suggested in the proposed labeling. The sponsor must also submit substantial evidence, generally consisting of adequate, well-controlled clinical trials to establish that the drug will have the effect it purports or is represented to have under the conditions of use prescribed, recommended, or suggested in the proposed labeling. In certain cases, the FDA may determine that a drug is effective based on one clinical study plus confirmatory evidence. Satisfaction of FDA premarket approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity of the product or disease. 12 Table of Contents Pre-clinical tests include laboratory evaluation of product chemistry, and formulation and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product. The conduct of the pre-clinical tests must comply with federal regulations and requirements, including the FDA’s good laboratory practices regulations and the U.S. Department of Agriculture’s (“USDA’s”) regulations implementing the Animal Welfare Act. The results of pre-clinical testing are submitted to the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long-term pre-clinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted. A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans. If the FDA has not imposed a clinical hold on the IND or otherwise commented or questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin. Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with Good Clinical Practice (“GCP”), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors, and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be submitted to the FDA as part of the IND. The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial patients. The trial protocol and informed consent information for patients in clinical trials must also be submitted to an institutional review board, or IRB, for approval. An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s requirements or may impose other conditions. Clinical trials to support NDAs for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In general, in Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses and, if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. The FDA may, however, determine that a drug is effective based on one clinical study plus confirmatory evidence. Only a small percentage of investigational drugs complete all three phases and obtain marketing approval. In some cases, the FDA may require post-market studies, known as Phase 4 studies, to be conducted as a condition of approval in order to gather additional information on the drug’s effect in various populations and any side effects associated with long-term use. Depending on the risks posed by the drugs, other post-market requirements may be imposed. After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. The FDA approval of the NDA is required before marketing of the product may begin in the U.S. The NDA must include the results of all pre-clinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. Under the statute and implementing regulations, the FDA has 180 days (the initial review cycle) from the date of filing to issue either an approval letter or a complete response letter, unless the review period is adjusted by mutual agreement between the FDA and the applicant or as a result of the applicant submitting a major amendment. In practice, the performance goals established pursuant to the Prescription Drug User Fee Act have effectively extended the initial review cycle beyond 180 days. The FDA’s current performance goals call for the FDA to complete review of 90 percent of standard (non-priority) NDAs within 10 months of receipt and within six months for priority NDAs, but two additional months are added to standard and priority NDAs for a new molecular entity (“NME”). The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug is manufactured. The FDA will not approve the product unless compliance with current GMP is satisfactory, and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied. 13 Table of Contents After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing 90 percent of resubmissions within two to six months depending on the type of information included. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy, (“REMS”), to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for health care professionals, and elements to assure safe use, (“ETASU”). ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained, or problems are identified following initial marketing. Disclosure of Clinical Trial Information Sponsors of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose certain clinical trial information on a public website maintained by the U.S. National Institutes of Health. Information related to the product, patient population, phase of investigation, study sites and investigator, and other aspects of the clinical trial is made public as part of the registration. Disclosure of the results of these trials can be delayed for up to two years if the sponsor certifies that it is seeking approval of an unapproved product or that it will file an application for approval of a new indication for an approved product within one year. Competitors may use this publicly available information to gain knowledge regarding the design and progress of our development programs. The Hatch-Waxman Act Orange Book Listing In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent the claims of which cover the applicant’s product. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of approval of an abbreviated new drug application, (“ANDA”). An ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths and dosage form as the listed drug and has been shown through bioequivalence testing to be bioequivalent to the listed drug. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, pre-clinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are considered to be therapeutically equivalent to the listed drug, are commonly referred to as “generic equivalents” to the listed drug and can often be substituted by pharmacists under prescriptions written for the original listed drug in accordance with state law. The ANDA applicant is required to certify to the FDA concerning any patents listed for the approved product in the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be infringed by the new product. The ANDA applicant may also elect to submit a section viii statement, certifying that its proposed ANDA labeling does not contain (or carves out) any language regarding the patented method-of-use, rather than certify to a listed method-of-use patent. If the applicant does not challenge the listed patents, the ANDA application will not be approved until all the listed patents claiming the referenced product have expired. A certification that the new product will not infringe the already approved product’s listed patents, or that such patents are invalid, is called a Paragraph IV certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant. The ANDA application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced product has expired. 14 Table of Contents Exclusivity Upon NDA approval of a new chemical entity or NCE, which is a drug that contains no active moiety that has been approved by the FDA in any other NDA, that drug receives five years of marketing exclusivity during which time the FDA cannot receive any ANDA or 505(b)(2) application seeking approval of a drug that references a version of the NCE drug. Certain changes to a drug, such as the addition of a new indication to the package insert, are associated with a three-year period of exclusivity during which the FDA cannot approve an ANDA or 505(b)(2) application that includes the change. An ANDA or 505(b)(2) application may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification and thus no ANDA or 505(b)(2) application may be filed before the expiration of the exclusivity period. For a botanical drug, the FDA may determine that the active moiety is one or more of the principal components or the complex mixture as a whole. This determination would affect the utility of any five-year exclusivity as well as the ability of any potential generic competitor to demonstrate that it is the same drug as the original botanical drug. Five-year and three-year exclusivities do not preclude FDA approval of a 505(b)(1) application for a duplicate version of the drug during the period of exclusivity, provided that the 505(b)(1) applicant conducts or obtains a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness. Patent Term Extension After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension. The allowable patent term extension is calculated as half of the drug’s testing phase — the time between IND submission and NDA submission — and all of the review phase — the time between NDA submission and approval up to a maximum of five years. The time can be shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years. For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent extension increases the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is reduced by one year. The director of the PTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted. Orphan Drugs Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition generally a disease or condition that affects fewer than 200,000 individuals in the U.S. (or affects more than 200,000 in the U.S. and for which there is no reasonable expectation that the cost of developing and making available in the U.S. a drug for such disease or condition will be recovered from sales in the U.S. of such drug). Orphan drug designation must be requested before submitting an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular active ingredient to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the U.S. for that product, for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product with orphan drug exclusivity. If the FDA designates an orphan drug based on a finding of clinical superiority, the FDA must provide a written notification to the sponsor that states the basis for orphan designation, including “any plausible hypothesis” relied upon by the FDA. The FDA must also publish a summary of its clinical superiority findings upon granting orphan drug exclusivity based on clinical superiority. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee. 15 Table of Contents Special Protocol Assessment A company may reach an agreement with the FDA under the Special Protocol Assessment, (“SPA”), process as to the required design and size of clinical trials intended to form the primary basis of an efficacy claim. According to its performance goals, the FDA is supposed to evaluate the protocol within 45 days of the request to assess whether the proposed trial is adequate, and that evaluation may result in discussions and a request for additional information. A SPA request must be made before the proposed trial begins, and all open issues must be resolved before the trial begins. If a written agreement is reached, it will be documented and made part of the administrative record. Under the FDC Act and FDA guidance implementing the statutory requirement, an SPA is generally binding upon the FDA except in limited circumstances, such as if the FDA identifies a substantial scientific issue essential to determining safety or efficacy after the study begins, public health concerns emerge that were unrecognized at the time of the protocol assessment, the sponsor and the FDA agree to the change in writing, or if the study sponsor fails to follow the protocol that was agreed upon with the FDA. U.S. Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status of our lead product candidate, such as IGC-AD1 or any other for which we may seek regulatory approval. Sales in the U.S. will depend in part on the availability of adequate financial coverage and reimbursement from third-party payors, which include government health programs such as Medicare, Medicaid, TRICARE, and the Veterans Administration, as well as managed care organizations and private health insurers. Prices at which we or our customers seek reimbursement for our product candidates can be subject to challenge, reduction, or denial by payors. The process for determining whether a payor will provide coverage for a product is typically separate from the process for setting the reimbursement rate that the payor will pay for the product. Third-party payors may limit coverage to specific products on an approved list or formulary, which might not include all the FDA-approved products for a particular indication. Also, third-party payors may refuse to include a branded drug on their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or another alternative is available. Medicare Part D, Medicare’s outpatient prescription drug benefit, contains protections to ensure coverage and reimbursement for oral oncology products, and all Part D prescription drug plans are required to cover substantially all oral anti-cancer agents. However, a payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be available. Private payors often rely on the lead of the governmental payors in rendering coverage and reimbursement determinations. Sales of products such as IGC-AD1 or any other product candidates will therefore depend substantially on the extent to which the costs of our products will be paid by third-party payors. Achieving favorable coverage and reimbursement from the Centers for Medicare and Medicaid Services (“CMS”) and/or the Medicare Administrative Contractors is typically a significant gating issue for successful introduction of a new product. Third-party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and services, in addition to their safety and efficacy. In order to obtain coverage and reimbursement for any product that might be approved for marketing, we may need to conduct studies in order to demonstrate the medical necessity and cost-effectiveness of any products, which would be in addition to the costs expended to obtain regulatory approvals. Third-party payors may not consider our product candidates to be medically necessary or cost-effective compared to other available therapies, or the rebate percentages required to secure favorable coverage may not yield an adequate margin over cost or may not enable us to maintain price levels sufficient to realize an appropriate return on our investment in drug development. Employees and Consultants As of March 31, 2021, we employed a team of approximately 50 full-time employees in our two segments. We also have contract workers and advisors in the U.S., India, Colombia, and Hong Kong. Available Information The Company’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Exchange Act, are filed with the Securities and Exchange Commission (the “SEC”). The Company is subject to the informational requirements of the Exchange Act and files or furnishes reports, proxy statements and other information with the SEC. Such reports and other information filed by the Company with the SEC are available free of charge on the Company’s website at www.igcinc.us when such reports are available on the SEC’s website. The public may read and copy any materials filed by the Company with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Room 1580, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. The contents of these websites are not incorporated into this filing. Further, the Company’s references to the URLs for these websites are intended to be inactive textual references only. 16 Table of Contents IGC maintains several internet addresses including www.igcinc.us, www.igcpharma.com , www.holihemp.com , www.hyalolex.com and www.herbo.com , among others. These, including our Twitter @IGCIR and other social media contain information about IGC and our products on these websites from time to time, as we plan to provide updates on the company, announcements regarding relevant research findings and patent approval, and other important information as we grow and expand. Website and social media references in this report are provided as a convenience and do not constitute, and should not be viewed as, incorporation by reference of the information available through, or contained on, the websites and in social media. Therefore, such information should not be considered part of this report. The Company’s filings with the SEC are accessible on SEC’s website, www.sec.gov .